Now that an underperforming stock market and the excesses of Enron have focused new attention on the use and abuse of stock options as a way to incentivize senior managers, what changes, if any, should companies make in their design of compensation packages? The answer depends on each company's philosophy and goals, but Wharton faculty and others suggest guidelines to help define the appropriate combination of executive incentives.
See Related:
- Executive PayWatch
- Ecomp Executive Compensation Database
- 'This Stuff Is Wrong'
- Not Badly Paid But Paid Badly
- Pay for Nonperformance?
- How Much Should A CEO Make?
- It's Not Our Fault -- Usually
- ERI Economic Research Institute - Executive Compensation and Salary Planning Data
- Have They No Shame?
- Institutional Investors and Executive Compensation (.pdf)
- Executive Compensation as an Agency Problem
- Remuneration: Where We've Been, How We Got to Here, What are the Problems, and How to Fix Them
- CEO Skill and Excessive Pay: A Breakdown in Corporate Governance?
- Setting the CEO's Pay: Economic and Psychological Perspectives
- Research Report: Executive Compensation
- The Compensation Game
- Pay Dirt
- Pay For Performance: Beating "Best Practices"
- Market Forces
- Fair or excessive? A reliable model for determining the appropriateness of executive compensation
- Are boards and CEOs accountable for the right level of work?
- Managing the complex relationship between executive pay and performance
- The Wide Divide: Executive vs. Worker Pay
- Performance Pay and Top-Management Incentives
- Pay Under Pressure
In a down market, the spotlight always shines on CEO compensation. But will the scrutiny actually drive change this time—or is this yet another passing storm?
- Fair Pay, Effective Pay: Equity compensation for a new era of accountability
Balancing shareholder concerns with the need to attract and retain talented people is a complicated task. Several key principles can help firms restructure compensation in a way that accommodates both goals.
- Six Degrees of Separation: Examining Back Door Links between Directors and CEO Pay
Yes, it pays to be friends of those who pay you, or even to be friends of their friends. That, roughly speaking, is the conclusion of a study analyzing the impact of director relationships on the compensation of chief executive officers.
- BusinessWeek 2005 Executive Compensation Scoreboard
This Scoreboard attempts to measure how closely pay matches performance. It compares an exec's total compensation with the company's total return to shareholders (appreciation + dividends) over three years, to minimize one-year windfalls.
- Are They Worthy?
Despite the shocking extremes, new studies claim CEO pay matches performance, and increasingly so.
- Peer Pressure: Inflating Executive Pay
- Boards' Concern Over CEO Pay Mounts
- Forbes Special Report: CEO Compensation (2007)
- How To Determine Logical Executive Compensation?
- Executive Pay's Faulty Market
- Corporate Governance and the Information Gap: The Use of Financial and Non-financial Information in Executive Compensation
- Economic Characteristics, Corporate Governance, and the Influence of Compensation Consultants on Executive Pay Levels
- The Costs of CEO Failure
- Bankers pay is deeply flawed
- Comparison Shopping
- Incentives for the Long Run: An Executive Compensation Plan That Looks Beyond the Next Quarter
- Fixing What's Wrong with Executive Compensation
- Gerry Hansell, Lars-Uwe Luther, Frank Plaschke, and Mathias Schatt
- A look at Executive Compensation
- The Truth About CEO Pay
- Just Rewards
- Background Report: Employee Stock Options (.pdf)
- Employee Stock Options: Their Use and Policy Implications
- Repricing of Stock Options
- It's Not Just How Many, But Who Gets Stock Options That Matters
- Are Stock Option Rescissions an Unfair Benefit?
- How Employees Value (Often Incorrectly) Their Stock Options
- Stock-Based Compensation and the Cost of Capital
- The Danger of Stock Option Grants
- Stock Options and Related Plans
- Opting for Stock Options
- Out of Options
- One Way to Settle the Controversy over Stock Options: Eliminate Them
- Are Stock Options In Your Future?
- Stock Option Repricing: Employees Benefit But What about Investors?
- Stock Options: The End of the Affair?
- Who Rules Accounting?
- Valuing Employee Stock Options: A Comparison of Alternative Models (.pdf)
- Less Ado about Options
- Stock Options and Long Term IPO Performance
- What's a Stock Worth?
- Toting Up Stock Options
- The Technology Entrepreneur's Guidebook
- Startup Stock Options
- Forget Black-Scholes?
Why the traditional option-pricing model may not be the best way to value employee grants.
- Is the Reprice Right? (Part One)
Many companies are repricing underwater stock options in an effort to retain talent. Here are the pros and cons.
- Is the Reprice Right? (Part Two)
Many companies are repricing underwater stock options. But others are opting to give employees a choice between keeping underwater options and canceling those options in order to receive a new grant at some point in the future.
- Recognize the True Cost of Compensation
Compensation options are a cost to the firm and need to be expensed if financial statements are to reflect the true value of the firm.
- An Ounce of Prevention
Here are some innovative ways companies are tweaking options to soften the blow to current shareholders.
- Term Sheet - Vesting
- Executive Stock Options Boost Company Performance But Options to Rank-and-File Workers Show Minimal Effect
Subject(s): Finance, Corporate Governance
Source(s): Knowledge@Wharton
Posted: 2002-05-02
# Views: 159
