Regulatory Constraints On Executive Compensation

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Regulatory Constraints on Executive Compensation

Author : Paul L. Joskow
Publisher :
ISBN 13 :
Total Pages : 67 pages
Book Rating : 4.:/5 (357 download)

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Book Synopsis Regulatory Constraints on Executive Compensation by : Paul L. Joskow

Download or read book Regulatory Constraints on Executive Compensation written by Paul L. Joskow and published by . This book was released on 1993 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the influence of economic regulation on the level and structure of executive compensation. We find substantial and persistent differences in CEO compensation between firms subject to economic regulation and those in unregulated industries. CEOs of regulated firms are paid substantially less, on average, than their counterparts in the unregulated sector. In particular, in the electric utility industry, the sector which is most tightly regulated and for which we have the most data, CEOs average only 30% to 50% of the compensation earned by the CEO of a comparable firm in the unregulated sector. Compensation in the regulated sector tends to be more heavily weighted toward salary and cash and away from incentive-based forms of pay (such as stock options), and tends to be less responsive to variations in firm financial performance. The pattern of compensation discounts across industries, over time, and between firms in the electric utility industry is broadly consistent with the presence of binding political constraints on executive pay, as medicated through the regulatory process.

Political Constraints on Executive Compensation

Author : Paul L. Joskow
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Political Constraints on Executive Compensation by : Paul L. Joskow

Download or read book Political Constraints on Executive Compensation written by Paul L. Joskow and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study explores the effect of regulatory and political constraints on the level of CEO compensation for 87 state-regulated electric utilities during 1978-1990. The results suggest that political pressures may constrain top executive pay levels in this industry. First, CEOs of firms operating in regulatory environments characterized by investment banks as relatively quot;proconsumerquot; receive lower compensation than do CEOs of firms in environments ranked as more friendly to investors. Second, CEO pay is lower for utilities with relatively high or rising rates, or a higher proportion of industrial customers. Finally, attributes of the commission appointment and tenure rules affect CEO compensation in ways consistent with the political constraint hypothesis.

Political Constraints on Executive Compensation

Author : Paul L. Joskow
Publisher :
ISBN 13 :
Total Pages : 31 pages
Book Rating : 4.:/5 (318 download)

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Book Synopsis Political Constraints on Executive Compensation by : Paul L. Joskow

Download or read book Political Constraints on Executive Compensation written by Paul L. Joskow and published by . This book was released on 1994 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study explores the effect of regulatory and political constraints on the level of CEO compensation for 87 state-regulated electric utilities during 1978-1990. The results suggest that political pressures may constrain top executive pay levels in this industry. First, CEOs of firms operating in regulatory environments characterized by investment banks as relatively pro-consumer' receive lower compensation than do CEOs of firms in environments ranked as more friendly to investors. Second, CEO pay is lower for utilities with relatively high or rising rates, or a higher proportion of industrial sales, consistent with earlier research that describes political pressures on electricity rates. Finally, attributes of the commission appointment and tenure rules affect CEO compensation in ways consistent with the political constraint hypothesis: for example, pay is lower in states with elected commissioners than in states where commissioners are appointed by the governor, all else equal. Despite apparently effective pressure to constrain pay levels in this sector, however, we find no evidence of related intra-industry variation in the sensitivity of pay to firm financial performance

Regulatory Constraints on CEO Compensation

Author : Paul L. Joskow
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis Regulatory Constraints on CEO Compensation by : Paul L. Joskow

Download or read book Regulatory Constraints on CEO Compensation written by Paul L. Joskow and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Pay Without Performance

Author : Lucian A. Bebchuk
Publisher : Harvard University Press
ISBN 13 : 9780674020634
Total Pages : 308 pages
Book Rating : 4.0/5 (26 download)

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Book Synopsis Pay Without Performance by : Lucian A. Bebchuk

Download or read book Pay Without Performance written by Lucian A. Bebchuk and published by Harvard University Press. This book was released on 2004 with total page 308 pages. Available in PDF, EPUB and Kindle. Book excerpt: The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.

The Regulation of Executive Compensation

Author : Kym Maree Sheehan
Publisher : Edward Elgar Publishing
ISBN 13 : 0857938339
Total Pages : 255 pages
Book Rating : 4.8/5 (579 download)

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Book Synopsis The Regulation of Executive Compensation by : Kym Maree Sheehan

Download or read book The Regulation of Executive Compensation written by Kym Maree Sheehan and published by Edward Elgar Publishing. This book was released on 2012-01-01 with total page 255 pages. Available in PDF, EPUB and Kindle. Book excerpt: ïBased on extensive interviews with those directly involved in the executive pay setting process _ executives themselves, remuneration committee members, remuneration consultants, and institutional investors _ this excellent study finally explains how, despite repeated regulation over the past twenty years in both the UK and Australia, limits on the amount executives get paid, and a clear relationship between pay and performance remain as elusive as ever. Dr. SheehanÍs study suggests that by targeting the pay setting process rather than pay itself, regulation may have contributed, albeit unintentionally, to the endless upward ratcheting of absolute levels of executive pay.Í _ John Roberts, University of Sydney, Australia ïFor those that believe executive remuneration in the UK and Australia is too high and poorly aligned with company performance, this book provides an excellent analytical framework and strong arguments in favor of greater shareholder oversight of remuneration practices and pay levels. It is well-written, carefully argued and persuasive in its treatment of the subject. I wholeheartedly recommend it.Í _ Randall S. Thomas, Vanderbilt University Law School, US In this timely book, Kym Sheehan examines the regulatory technique known as ïsay on payÍ _ where shareholders vote on executive compensation in an annual, advisory vote on the remuneration report. Using the model of the regulated remuneration cycle, and drawing upon evidence of its operation from interviews, voting data and remuneration reports from UK and Australian companies, the book demonstrates whether say on pay can operate successfully to both constrain executive greed and ensure accountability exists for company performance and decision-making. The Regulation of Executive Compensation is essential reading for corporate governance academics, remuneration consultants, company directors, regulators, pension and superannuation fund trustees and unions. Politicians and their policy advisers, lawyers, accountants and anyone concerned about the corporate governance of listed companies will find much to interest them in this detailed study.

Regulating Executive Pay

Author : Nancy L. Rose
Publisher :
ISBN 13 :
Total Pages : 34 pages
Book Rating : 4.:/5 (223 download)

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Book Synopsis Regulating Executive Pay by : Nancy L. Rose

Download or read book Regulating Executive Pay written by Nancy L. Rose and published by . This book was released on 2000 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study explores corporate responses to 1993 legislation, implemented as section 162(m) of the Internal Revenue Code, that capped the corporate tax deductibility of top management compensation at $1 million per executive unless it qualified as substantially performance-based.' We detail the provisions of this regulation, describe its possible effects, and test its impact on U.S. CEO compensation during the 1990s. Data on nearly 1400 publicly-traded U.S. corporations are used to explore the determinants of section 162(m) compensation plan qualification and the effect of section 162(m) on CEO pay. Our analysis suggests that section 162(m) may have created a focal point' for salary compensation, leading some salary compression close to the deductibility cap. There is weak evidence that compensation plan qualification is associated with higher growth rates, as would be the case if qualification relaxed some political constraints on executive pay. There is little evidence that the deductibility cap has had significant effects on overall executive compensation levels or growth rates at firms likely to be affected by the deductibility cap, however, nor is there evidence that it has increased the performance sensitivity of CEO pay at these firms. We conclude that corporate pay decisions seem to be relatively insulated from this type of blunt policy intervention

Research Handbook on Executive Pay

Author : John S. Beasley
Publisher : Edward Elgar Publishing
ISBN 13 : 1781005109
Total Pages : 553 pages
Book Rating : 4.7/5 (81 download)

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Book Synopsis Research Handbook on Executive Pay by : John S. Beasley

Download or read book Research Handbook on Executive Pay written by John S. Beasley and published by Edward Elgar Publishing. This book was released on 2012-01-01 with total page 553 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research on executive compensation has exploded in recent years, and this volume of specially commissioned essays brings the reader up-to-date on all of the latest developments in the field. Leading corporate governance scholars from a range of countries set out their views on four main areas of executive compensation: the history and theory of executive compensation, the structure of executive pay, corporate governance and executive compensation, and international perspectives on executive pay. The authors analyze the two dominant theoretical approaches – managerial power theory and optimal contracting theory – and examine their impact on executive pay levels and the practices of concentrated and dispersed share ownership in corporations. The effectiveness of government regulation of executive pay and international executive pay practices in Australia, the US, Europe, China, India and Japan are also discussed. A timely study of a controversial topic, the Handbook will be an essential resource for students, scholars and practitioners of law, finance, business and accounting.

Executive Compensation

Author : P. Garth Gartrell
Publisher : West
ISBN 13 : 9780314933546
Total Pages : 391 pages
Book Rating : 4.9/5 (335 download)

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Book Synopsis Executive Compensation by : P. Garth Gartrell

Download or read book Executive Compensation written by P. Garth Gartrell and published by West. This book was released on 2011 with total page 391 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Politics of Pay

Author : Kevin J. Murphy
Publisher :
ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Politics of Pay by : Kevin J. Murphy

Download or read book The Politics of Pay written by Kevin J. Murphy and published by . This book was released on 2018 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: The persistent outrage over CEO pay expressed by politicians, the press, media, labor unions, and the general public (but not shareholders) have prompted the imposition of a wide range of disclosure requirements, tax policies, accounting rules, governance reforms, direct legislation, and other rules constraining executive compensation stretching back nearly a century. We analyze the regulations that have substantially damaged the efficacy of CEO pay practices, ranging from the first disclosure rules in the 1930s to the 2018 Trump tax rules. We discuss the political forces behind the regulatory interventions, and assess the continuing unintended consequences of these interventions. Our emerging conclusion is that the best way the government can fix executive compensation is to stop trying to fix it, and by undoing the damage already caused through existing regulations that have, in aggregate, imposed enormous costs on organizations, their shareholders, and social welfare.

Symbolic Politics and the Regulation of Executive Compensation

Author : Sandra L. Suarez
Publisher :
ISBN 13 :
Total Pages : 54 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Symbolic Politics and the Regulation of Executive Compensation by : Sandra L. Suarez

Download or read book Symbolic Politics and the Regulation of Executive Compensation written by Sandra L. Suarez and published by . This book was released on 2015 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: When politicians feel popular pressure to act, but are unwilling or unable to address the root cause of the problem, they resort to symbolic policymaking. In this paper, I examine excessive executive compensation as an issue that rose to the top of the political agenda during both the Great Depression and the Great Recession. Presidential candidates, members of Congress, the media, and the public alike blamed corporate greed for the economic downturn. In both instances, however, enacted legislation stopped short of changing the way in which executive pay was determined or placing effective, enforceable limits on it. I analyze the nature of the democratic process and contend that public policy scholars need to pay more attention to the occurrence of symbolic policies. The category of symbolic policies offers a more accurate approach to understanding the politics of executive compensation in the US during the two crises and helps explain why, in spite of the recent legislative efforts, it continues to rise.

Nonqualified Deferred Compensation Answer Book

Author : Henry A. Smith, III
Publisher : Aspen Publishers
ISBN 13 : 9781454886099
Total Pages : 0 pages
Book Rating : 4.8/5 (86 download)

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Book Synopsis Nonqualified Deferred Compensation Answer Book by : Henry A. Smith, III

Download or read book Nonqualified Deferred Compensation Answer Book written by Henry A. Smith, III and published by Aspen Publishers. This book was released on 2016-11-08 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The past few years have seen major changes in the area of executive compensation. With recent legislation and regulations imposing new limits on executive pay, it is more important than ever for you to have the most current information when it comes to compensating executive talent. Nonqualified Deferred Compensation Answer Book provides the necessary guidance on: How to design, fund, implement, and operate a plan tailored to the specific needs of your organization Staying in compliance with the many rules and requirements Keeping on top of the new tax, legislative, and regulatory changes that affect nonqualified arrangements And much more! In addition to answering over 500 key questions, Nonqualified Deferred Compensation Answer Book provides a host of special features, including: Dozens of examples, pointers, notes and cautions Overviews and Case Studies on each key area Citations for researching a particular item in greater detail ERISA, IRS, and securities law considerations

Executive Pay

Author : Ira T. Kay
Publisher :
ISBN 13 :
Total Pages : 20 pages
Book Rating : 4.E/5 ( download)

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Book Synopsis Executive Pay by : Ira T. Kay

Download or read book Executive Pay written by Ira T. Kay and published by . This book was released on 2008 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Need for Federal Pre-Emption of Executive Compensation Reform

Author : Cory Howard
Publisher :
ISBN 13 :
Total Pages : 16 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Need for Federal Pre-Emption of Executive Compensation Reform by : Cory Howard

Download or read book The Need for Federal Pre-Emption of Executive Compensation Reform written by Cory Howard and published by . This book was released on 2013 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since the beginning of the most recent economic downturn, there has been an increased level of attention on the pay that executives at publicly traded companies have received. Numerous reforms, including the Dodd-Frank Act and the Troubled Asset Relief Program (TARP), imposed transient, although included some permanent, limitations on executive compensation packages. However, given the importance of executive compensation reform to both corporate governance and economic/social justice initiatives, it is imperative that the federal legislature do more.This article will explore some of the patchwork of regulations that the federal government has enacted and the methods that the states use to control executive compensation. After examining the failure of the states to curb excessive compensation, and noting the problems that will prevent them from ever doing so, the author asserts that comprehensive federal regulation is the only way to ensure that this very important challenge is tackled. By exploring some potential ways that Congress could do so, this article will show the practical social and legal benefits of wholesale federal regulation.

Executive Compensation

Author : Andrew W. Stumpff
Publisher :
ISBN 13 : 9781634602693
Total Pages : 0 pages
Book Rating : 4.6/5 (26 download)

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Book Synopsis Executive Compensation by : Andrew W. Stumpff

Download or read book Executive Compensation written by Andrew W. Stumpff and published by . This book was released on 2017 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Hardbound - New, hardbound print book.

Executive Compensation and Earnings Management Under Moral Hazard

Author : Bo Sun
Publisher : DIANE Publishing
ISBN 13 : 1437930980
Total Pages : 33 pages
Book Rating : 4.4/5 (379 download)

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Book Synopsis Executive Compensation and Earnings Management Under Moral Hazard by : Bo Sun

Download or read book Executive Compensation and Earnings Management Under Moral Hazard written by Bo Sun and published by DIANE Publishing. This book was released on 2010-08 with total page 33 pages. Available in PDF, EPUB and Kindle. Book excerpt: Analyzes executive compensation in a setting where managers may take a costly action to manipulate corporate performance, and whether managers do so is stochastic. Examines how the opportunity to manipulate affects the optimal pay contract, and establishes necessary and sufficient conditions under which earnings management occurs. The author¿s model provides a set of implications on the role earnings management plays in driving the time-series and cross-sectional variation of executive compensation. In addition, the model's predictions regarding the changes of earnings management and executive pay in response to corporate governance legislation are consistent with empirical observations. Charts and tables.

The Paradox of Executive Compensation Regulation

Author : Minor Myers
Publisher :
ISBN 13 :
Total Pages : 41 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis The Paradox of Executive Compensation Regulation by : Minor Myers

Download or read book The Paradox of Executive Compensation Regulation written by Minor Myers and published by . This book was released on 2019 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: Two distinct and competing normative objectives lie behind policies aimed at regulating executive compensation. One seeks to align executive pay with company performance, a commitment held widely by specialists in law and financial economics. The second seeks to regulate the magnitude of compensation to ensure that no one is paid “too much.” Both share the goal of altering the status quo, and for that reason they often make uneasy allies in legislative reform efforts. These approaches often result in legislative schizophrenia, with different provisions sitting uncomfortably next to each other. The Dodd-Frank Act exemplifies this dynamic. On the one hand, the Act includes provisions designed to push pay into greater alignment with performance by requiring firms to clearly disclose the pay-performance relationship and also hold periodic votes on compensation. On the other hand, Dodd-Frank also mandated a so-called pay ratio disclosure, which requires that each public company disclose the ratio of its CEO's pay to the pay of its median employee. Through a series of psychological experiments, we demonstrate that the pay ratio disclosure undermines the policy goal of aligning pay with performance. Our study focuses on how non-specialists think about executive compensation. Lay attitudes are of interest for two reasons. First, lay persons may differ dramatically from law and finance specialists in how they analyze executive compensation. We find that lay persons are largely indifferent to firm performance in evaluating executive compensation. Second, the views of lay persons shape policy because politicians will be responsive to public opinion, not specialist opinion, particularly on matters of high salience. Lay attitudes, in other words, affect the substantive governance obligations, at least at the federal level. Whatever attention laypersons devote to performance vanishes when they are presented with the median pay ratio. Their level of anger--the extent to which they desire that someone “do something” about executive compensation--is determined exclusively by absolute levels of pay and by the median pay ratio disclosure, not by firm performance. This brings into view a paradox of executive compensation regulation: Neither reform movement can succeed legislatively without the other, yet they may work at cross-purposes with each other. We offer a preliminary exploration of some implications of these findings for corporate governance reform.