Executive Compensation Capital Structure Payouts And Cash Holdings
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| Author | : Adilah Azhari |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2015 |
| Genre | : |
| ISBN | : |
The aim of this research is to examine the relationship between CEO pay and firm's financial policies. According to agency theory, manager-shareholder conflicts of interest can be alleviated (and managerial compensation can be influenced) by debt. Debt lowers the level of free cash flow which managers are able to obtain because monitoring increases. This means that when the risk of bankruptcy appears, managers must consider the best financial interests of shareholders. Under agency theory, pay-performance sensitivity is smaller for high-debt companies when alternatives are available for high alignment incentives and high debt. The research objectives focus on three empirical chapters to explore the association between CEO pay and firm's financial policies for UK firms. The first study investigates the relationship between pay-performance sensitivity and debt as the explanatory variables. In the second study, the link between CEO compensation and corporate payout policy by segregating between total payouts, dividends and share repurchases are explored. Finally, the last objective examines the interaction between CEO pay packages and cash holdings of the firm. The research sample consists of 183 publicly traded companies listed on the FTSE 350 from 1999 to 2008. The estimates in the pay-performance study show mixed support for pay-performance and leverage because the negative coefficients for market debt have weak significance overall when median regressions are employed. Thus, it can be concluded that a firm's leverage has little effect on pay-performance sensitivity as a mechanism to align the interests of the firm's CEO and debt holders. However, there is strong support for the hypothesis that CEO pay-performance sensitivity increases with a firm's growth opportunities, which suggests that firms award higher equity compensation to attract managers with more talent. The second study in this research investigates how corporate payout policy is influenced by CEO share ownership, CEO stock options and CEO long-term incentive plans (LTIPs) in UK firms from 1999 to 2008 using Tobit regressions (for total payouts, dividends and share repurchases) and logistic regressions for the propensity of firms paying out to shareholders. The results show that CEO share ownership LTIPs have positive effects on corporate payout policy. In contrast, corporate governance characteristics do not show conclusive results which affect changes in payout policy. Dividend payout is significantly influenced by CEO share ownership compared to share repurchase payout. The findings support the notion that CEOs' share equity ownership is used to align managerial interest with shareholders in terms of cash payouts to shareholders. In the final empirical chapter, the study focuses on the effect of CEO pay and corporate governance on cash holdings. The study investigates the determinants of cash holdings based on free cash flow and the agency model using cash ratios (cash to sales, cash to assets, cash to market value and log of cash) as dependent variables. The analysis documents that CEO ownership and log LTIPs both have positive and strong relationships with cash ratios. The results support the hypothesis that equity compensation can be used to align managers' interests with those of shareholders.
| Author | : Edge |
| Publisher | : Windsor Professional Information |
| Total Pages | : 564 |
| Release | : 2004 |
| Genre | : Business & Economics |
| ISBN | : 9781893190252 |
Drawing from nine of the leading compensation advisory firms in the country, Executive Compensation: The Professional's Guide to Current Issues and Practices is the first publication to bring together a number of the top practitioners and experts in the field to provide the information and insights needed to navigate within the new era of accountability and performance standards.
| Author | : John S. Beasley |
| Publisher | : Edward Elgar Publishing |
| Total Pages | : 553 |
| Release | : 2012-01-01 |
| Genre | : Business & Economics |
| ISBN | : 1781005109 |
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.
| Author | : Dhruba Banjade |
| Publisher | : |
| Total Pages | : 116 |
| Release | : 2022 |
| Genre | : Cash management |
| ISBN | : |
The dissertation consists of three essays. The first essay investigates the relationship between corporate cash holdings and firm performance in new and old economy firms. Results show that firm performance increases when they maintain cash balances at or slightly above a certain level (optimum level). However, their performance degrades if they hold cash at levels beyond the optimum. Furthermore, I find that new economy firms hold more cash relative to their old economy counterparts. Corporate governance and balanced board structure also impact cash holdings and firm performance. I find that as institutional ownership increases, firm performance increases due to better monitoring. Fair board structure policy helps to minimize agency problems. Firms that have a diversity policy tend to hold less cash. Firm performance was better for firms that held excess cash balances during the financial crisis period (2007-2009). Firm performance decreases with excess cash holdings beyond the optimum during regular economic circumstances.The second essay examines the impact of cash holdings on CEO compensation. Results show that CEO compensation is higher when the firm holds greater cash reserves. I also find a positive relationship between CEO total compensation and firm performance. However, their benefit decreases when firms hold excess cash. I find that CEO compensation is higher in new economy firms than old economy firms. I also examine the relationship between a balanced board structure policy and CEO compensation, and I find a negative correlation between board diversity policy and CEO total compensation. The third essay examines the impact of ESG (Environmental, Social, and Governance) and ESG controversy scores on firm performance, cash holdings, and CEO compensation. I find a positive relationship between CEO compensation and ESG scores. For the new economy firms, firm value increases by 1.81% if they improve their ESG scores by 1% during the financial crisis period.
| Author | : Lucian A. Bebchuk |
| Publisher | : Harvard University Press |
| Total Pages | : 308 |
| Release | : 2004 |
| Genre | : Business & Economics |
| ISBN | : 9780674020634 |
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.
| Author | : Frederick D. Lipman |
| Publisher | : John Wiley & Sons |
| Total Pages | : 336 |
| Release | : 2008-06-27 |
| Genre | : Business & Economics |
| ISBN | : 9780470283035 |
Executive Compensation Best Practices demystifies the topic of executive compensation, with a hands-on guide providing comprehensive compensation guidance for all members of the board. Essential reading for board members, CEOs, and senior human resources leaders from companies of every size, this book is the most authoritative reference on executive compensation.
| Author | : Mercer, LLC |
| Publisher | : John Wiley & Sons |
| Total Pages | : 288 |
| Release | : 2009-03-17 |
| Genre | : Business & Economics |
| ISBN | : 047047811X |
The numerous incentive approaches and combinations and their implications can be dizzying even to the compensation professional. Pay for Results provides a road map for developing and implementing executive incentives that drive business needs and strategy. It is filled with specific analytic tools, including tables, exhibits, forms, checklists. In addition, it uncovers myths in performance measurement strategy and design. Timely and thorough, this book expertly shows businesses how to drive their specific needs and strategy. Human resources and compensation officers will discover how to apply performance metrics that align with shareholder investment.
| Author | : Virginia Bodolica |
| Publisher | : Routledge |
| Total Pages | : 246 |
| Release | : 2015-06-26 |
| Genre | : Business & Economics |
| ISBN | : 1317624319 |
Over the past decades, the total value of executive compensation packages has been rising dramatically, contributing to a wider pay gap between the chief executive officer and the average worker. In the midst of the financial turmoil that brought about a massive wave of corporate failures, the lavish executive compensation package has come under an intense spotlight. Public pressure has mounted to revise the levels and the structure of executive pay in a way that will tie more closely the executive wealth to that of shareholders. Merger and acquisition (M&A) activities represent an opportune setting for gauging whether shareholder value creation or managerial opportunism guides executive compensation. M&As constitute major examples of high-profile events prompted by managers who typically conceive them as a means for achieving higher levels of pay, even though they are frequently associated with disappointing returns to acquiring shareholders. Mergers and Acquisitions and Executive Compensation reviews the existing empirical evidence and provides an integrative framework for the growing body of literature that is situated at the intersection of two highly debated topics: M&A activities and executive compensation. The proposed framework structures the literature along two dimensions, such as M&A phases and firm’s role in a M&A deal, allowing readers to identify three main streams of research and five different conceptualizations of causal relationships between M&A transactions and executive compensation. The book makes a comprehensive review of empirical studies conducted to date, aiming to shed more light on the current and emerging knowledge in this field of investigation, discuss the inconsistencies encountered within each stream of research, and suggest promising directions for further exploration. This book will appeal to researchers and students alike in the fields of organizational behavior and governance as well as accounting and accountability.
| Author | : Lucian Bebchuk |
| Publisher | : |
| Total Pages | : 312 |
| Release | : 2004-11-22 |
| Genre | : Business & Economics |
| ISBN | : |
A powerful critique of executive compensation and corporate governance, "Pay Without Performance" points the way to restoring corporate integrity and improving corporate performance.
| Author | : Richard N Ericson |
| Publisher | : John Wiley & Sons |
| Total Pages | : 336 |
| Release | : 2010-05-20 |
| Genre | : Business & Economics |
| ISBN | : 0470616121 |
Make the most of the new standards Every year companies spend millions of dollars on executive incentives. All too often, however, these programs provide a very weak link between pay and performance, with executives potentially rewarded as much for bad decisions as they are for good ones. Packed with examples, The New Standards insightfully discusses: How to link pay with business results that create long-term value Why incentive structures can discourage management from reasonable risk-taking, in some cases, and can enocourage imprudent risks in others The full range of inputs that should guide proper incentive policy Why performance measures must reflect both the quality and quantity of earnings Risk, executive behavior, and the cost of capital How to use valuation criteria when choosing metrics The pros and cons of common approaches to stock-based incentive pay Written by noted compensation expert Richard Ericson, this innovative book is a must-read for directors and management concerned with executive compensation design or financial performance measurement and forecasting. Get the guidance and concrete solutions you need to thoroughly reexamine your executive compensation policies and practices with the principles and financial maxims found in The New Standards.
