Internal Promotion and the Effect of Board Monitoring : A Comparison of Japan and the United States

This paper analyses two pronounced features of Japanese corporate governance : large corporate boards almost entirely composed of insiders and the tendency to appoint CEOs through internal promotions. It is often argued that Japanese boards are less effective in monitoring CEOs than U.S. boards which tends to be composed of a small number of directors, majority of which are outsiders. I show that Japanese corporate governance exhibits less inefficiencies than U.S. corporate governance. I further discuss the recent changes in Japanese corporate governance and provide theoretical explanation that they do not necessarily enhance board monitoring.Board Monitoring, Distortion of Bargaining Surplus, Japanese Corporate Governance, US Corporate Governance, Board Size

Executive equity compensation and incentives: a survey

Stock and option compensation and the level of managerial equity incentives are aspects of corporate governance that are especially controversial to shareholders, institutional activists, and government regulators. Similar to much of the corporate finance and corporate governance literature, research on stock-based compensation and incentives has not only generated useful insights, but also produced many contradictory findings. Not surprisingly, many fundamental questions remain unanswered. In this study, the authors synthesize the broad literature on equity-based compensation and executive incentives and highlight topics that seem especially appropriate for future research.Executives ; Stockholders ; Corporate governance

Environmental modelling of the Chief Information Officer

Since the introduction of the term in the 1980’s, the role of the Chief Information Officer (CIO) has been widely researched. Various perceptions and dimensions of the role have been explored and debated. However, the explosion in data proliferation (and the inevitable resulting information fuelled change) further complicates organisational expectations of the CIOs role. If organisations are to competitively exploit the digital trend, then those charged with recruiting and developing CIOs now need to be more effective in determining (and shaping) CIO traits and attributes, within the context of their own organisational circumstances and in line with stakeholder expectations. CIOs also need to determine their own suitability and progression within their chosen organisation if they are to remain motivated and effective. Before modelling the role of the future CIO, it is necessary to synthesise our current knowledge (and the lessons learnt) about the CIO. This paper, therefore, aims to identify and summate the spectrum of key researched ‘themes’ pertaining to the role of the CIO. Summating previous research, themes are modelled around four key CIO ‘dimensions’, namely (1) Impacting factors, (2) Controlling factors (3) Responses and (4) CIO ‘attributes’. Having modelled the CIOs current environment, and recognising the evolving IT enabled information landscape, the authors call for further research to inform the recruitment and development of the future CIO in terms of personal attributes and the measurable impact such attributes will have on their respective organisation

Optimal Executive Compensation vs. Managerial Power: A Review of Lucian Bebchuk and Jesse Fried's "Pay without Performance: The Unfulfilled Promise of Executive Compensation"

This essay reviews Bebchuk and Fried's "Pay without Performance: The Unfulfilled Promise of Executive Compensation". Bebchuk and Fried criticize the standard view of executive compensation, in which executives negotiate contracts with shareholders that provide incentives that motivate them to maximize the shareholders' welfare. In contrast, Bebchuk and Fried argue that executive compensation is more consistent with executives who control their own boards, and who maximize their own compensation subject to an "outrage constraint". They provide a host of evidence consistent with this alternative viewpoint. The book can be evaluated from both a positive and a normative perspective. From a positive perspective, much of the evidence they present, especially about the camouflage and risk-taking aspects of executive compensation systems, is fairly persuasive. However, from a normative perspective, the book conveys the idea that policy changes can dramatically improve executive compensation systems and consequently overall corporate performance. It is unclear to me how effective in practice are potential reforms designed to achieve such changes likely to be.

What is Fair Pay for Executives? An Information Theoretic Analysis of Wage Distributions

The high pay packages of U.S. CEOs have raised serious concerns about what would constitute a fair pay.Comment: 16 page

Built to Last: Focusing Corporations on Long-Term Performance

This report addresses the increasingly short-term focus by many business leaders that is damaging the ability of public companies to sustain long-term performance. This trend is hampering growth in the American economy. The report offers recommendations for corporations to improve performance by focusing on long-term goals. "Short-termism" is defined as an undue focus on meeting quarterly forecasts and a lesser emphasis on long-term planning

What Do Unions Do to Executive Compensation?

We estimate the relation between union presence and executive compensation using a unique panel of executives in publicly listed US firms during the period 1992-2001. We find evidence that union presence is associated with lower levels of total executive compensation. We find this union effect to be primarily the result of substantially lower stock option awards, and to a lesser extent due to lower cash pay. Moreover, the negative relation between unionization and executive remuneration becomes larger at the higher end of the conditional distribution of executive remuneration. We also find that the elasticity of cash pay to financial performance is similar across unionized and non-unionized firms, and that union presence is associated with a more compressed intra-firm and inter-firm executive compensation structure.Unions, executive compensation, Implicit regulation

An analysis of the perceived effectiveness of remuneration committees in deciding on executive compensation in South African listed companies

Includes bibliographical references (leaves 82-88).This thesis will examine the administration of executive compensation in listed companies in South Africa in order to understand the background to the topical emotion expressed by the public about the quantum of executive earnings. The Thesis attempts to explain how approaches are made to these vast payments. It commences with the history of the management of executive compensation. Before the 1990s, disclosure of directors' emoluments was limited to one amount. Companies suffered losses due to the Agency Theory where executives dominated boards. With the introduction of remuneration committees and corporate governance, control was moved to a committee of the board of -non-executive directors (a remuneration committee). The purpose of this research was to ascertain whether such a committee is effective. Interviews were held with leading executives and an analyst. An electronic survey was dispatched to the chief executive officers and chief financial officers of a large selection of listed companies. The results of the research are summarised and conclusions expressed on all such views with the addition of limited input of the author's views. The question requires an examination of the effectiveness of remuneration committees. Some suggestions are also made as to future research and actions which may be conducted. This thesis shows that remuneration committees are not as effective as they should be and will explain why this is so