The Taxation of Executive Compensation

Over the past 20 years, there has been a dramatic increase in the share of executive compensation paid through stock options. In this paper, we examine the extent to which tax policy has influenced the composition of executive compensation, and discuss the implications of rising stock-based pay for tax policy. We begin by describing the tax rules for executive pay in detail and analyzing how changes in various tax rates affect the tax advantages of stock options relative to salary and bonus. Our empirical analysis leads to three conclusions. First, there is little evidence that tax changes have played a major role int the dramatic explosion in executive stock option pay since 1980. Although the tax advantage of options has approximately dounbled since the early advantage of options has approximately doubled since the early 1980s options currently have only a slight tax advantage relative to cash - approximately $4 per$100 of pre-tax compensation to the executive. A more convincing story for the dramatic explosion in stock options involves changes in corporate governance and the market for corporate control. For example, there is a strong correlation between the fraction of shares held by large institutional investors and the fraction of ececutive pay in the form of stock options, a result that holds both longitudinally and cross-sectionally. Second, we find evidence that the million dollar rule (which limited the corporate deductibility of non-performance-related executive compensateion to $1 million) led firms to adjust the composition of their pay away from salary and toward "performance related pay," although our estimates suggest that substitution was minor. We find no evience that the regulation decreased the level of total compensation. Third, we examine whether there is evidence for significant shifting of the timing of option exercieses in response to changes in tax rates. After replicating the Goolsbee (1999) result regardin tax-shifting with our data for the 1993 tax reform, we show that no such shifting occurred in either of the two tax reforms of the 1980s. Moreover, we find evidence that much of the unusually large level of option exercises in 1992 was the result of the rising stock market rather than the change in marginal tax rates.

Effects of damping on the quantum limits to optical phase shifts in Kerr nonlinear media

It was recently shown [Phys. Rev. A 45, 1919 (1992)] that the phase shift induced by a control beam on a signal in cross Kerr modulation is limited by the quantum nature of the control. We show that dissipation rapidly restores the classical phase shift

Reputational Sanctions in China\u27s Securities Market

Literature suggests two distinct paths to stock market development: an approach based on legal protections for investors, and an approach based on self-regulation of listed companies by stock exchanges. This Essay traces China\u27s attempts to pursue both approaches, while focusing primarily on the role of the stock exchanges as regulators. Specifically, the Essay examines a fascinating but unstudied aspect of Chinese securities regulation – public criticism of listed companies by the Shanghai and Shenzhen exchanges. Based on both event study methodology and extensive interviews of market actors, we find that the public criticisms have significant effects on listed companies and their executives. On both exchanges, significant abnormal stock price returns occur in response to corporate disclosure of the underlying misconduct giving rise to the criticisms, as well as in response to publications of the criticisms themselves. Interviews suggest that the impact of the stock exchange criticisms extends beyond the stock market, as banks and bank regulators make use of the sanction data for their own purposes. We evaluate the role of public criticisms in China\u27s evolving scheme of securities regulation, contributing to several strands of research on the role of the media in corporate governance, the use of shaming sanctions in corporate governance, and the importance of informal mechanisms in supporting China\u27s economic growth

Guiding Capital Sentencing Discretion beyond the Boiler Plate : Mental Disorder as a Mitigating Factor

In five decisions handed down on July 2, 1976, the United States Supreme Court held that the death penalty may be imposed for the crime of murder, so long as there are clear standards to guide the sentencing authority and the sanction is not imposed mandatorily. The authors examine the eighth amendment doctrinal framework used by the Court in the July 2 Cases, with particular reference to the requirement that individualized mitigating information be considered in the sentencing decision. Illustrating that requirement, they contend that mental disorder should be considered as a possibly mitigating factor and then suggest a standard by which the sentencing authority might evaluate evidence of mental disorders, particularly retardation and sociopathy

SSME technology test bed fast shutdown assessment

The fastest practical shutdown sequence for the Technology Test Bed Engine is developed. A sequence is defined and key issues addressed. The conclusion of the study is that a fastest shutdown sequence within the existing SSME design capability is practical and can cut oxidizer consumption by 50 percent. However, the revised sequence would not have prevented any of the prior experienced SSME incidents and would introduce development risk to the program

Switchgrass as a Bioenergy Crop: Biomass Production and Soil Carbon Sequestration in Response to Nitrogen Fertilization [abstract]

Only abstract of poster available.Track II: Transportation and BiofuelsSwitchgrass (Panicum virgatum L.) is a warm-season, perennial grass native to the prairie region of the central U.S. Recent attention has focused on the development of switchgrass as a biomass crop for the production of cellulosic ethanol and other advanced biofuels and bioproducts. Since switchgrass possesses a deep, fibrous root system, it can also offer environmental benefits, including enhanced soil carbon sequestration. Presently, information regarding the management of switchgrass as a low-carbon energy crop is incomplete. Because nitrogen (N) is generally the most limiting resource for crop production, field experiments were conducted to evaluate the effects of N fertilization on biomass production and soil carbon sequestration by switchgrass. In 2006-2007, switchgrass plots were treated with 0, 65, 140, or 220 kg N ha-1 in the spring and harvested following frost in the Fall. Additionally, in Fall 2005 and 2007, soil samples were collected to a depth of 100 cm using a hydraulic probe and soil organic carbon (SOC) content was determined using combustion analysis and pressure calcimetery. Biomass yield demonstrated a quadratic response to N, with optimal yield of 13 ± 0.6 (mean ± se) Mg ha-1 at 140 kg N ha-1. Nitrogen fertilization also had pronounced effects on SOC content. Over the two-year experimental period, significant gains in SOC were detected at input rates of 65 and 140 kg N ha-1, but SOC remained unchanged at rates of 0 and 220 kg N ha-1. Therefore, similar to biomass yield, SOC also exhibited an optimal response to N inputs. These results indicate that both biomass production and carbon sequestration by switchgrass can be managed using N fertilizers, and that over the short-term both are optimized with input rates in the range of 140 kg ha-1