Stock Options for Undiversified Executives

We employ a certainty-equivalence framework to analyze the cost and value of, and pay/performance incentives provided by, non-tradable options held by undiversified, risk-averse executives. We derive Executive Value' lines, the risk-adjusted analogues to Black-Scholes lines, and distinguish between executive value' and company cost.' We demonstrate that the divergence between the value and cost of options explains, or provides insight into, virtually every major issue regarding stock option practice including: executive views about Black-Scholes measures of options; tradeoffs between options, stock and cash; exercise price policies; connections between the pay-setting process and exercise price policies; institutional investor views regarding options and restricted stock; option repricings; early exercise policies and decisions; and the length of vesting periods. It also leads to reinterpretations of both cross-sectional facts and longitudinal trends in the level of executive compensation.

Managerial Capital and the Market for CEOs

This paper reconciles two pronounced trends in U.S. corporate governance: the increase in pay levels for top executives, and the increasing prevalence of appointing CEOs through external hiring rather than internal promotions. We propose that these trends reflect a shift in the relative importance of "managerial ability" (transferable across companies) and "firm-specific human capital" (valuable only within the organization). We show that if the supply of workers in the corporate sector is relatively elastic, an increase in the relative importance of managerial ability leads to fewer promotions, more external hires, and an increase in equilibrium average wages for CEOs. We test our model using CEO pay and turnover data from 1970 to 2000. We show that CEO compensation is higher for CEOs hired from outside their firm, and for CEOs in industries where outside hiring is prevalent.CEO pay, CEO turnover, General skills, Firms specific skills

Subjective Performance Measures in Optimal Incentive Contracts

Objective measures of performance are seldom perfect. In response, incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures. This paper explores the combined use of subjective and objective performance measures in (respectively) implicit and explicit incentive contracts. Naturally, objective and subjective measures often are substitutes, sometimes strikingly so: we show that if objective measures are sufficiently close to perfect then no implicit contracts are feasible (because the firm's fallback position after reneging on an implicit contact is too attractive). We also show, however, that objective and subjective measures can reinforce each other: if objective measures become more accurate then in some circumstances the optimal contract puts more weight on subjective measures (because the improved objective measures increase the value of the ongoing relationship, and so reduce the firm's incentive to renege). We also analyze the use of subjective weights on objective performance measures, and provide case-study evidence consistent with our analyses.

The Resurrection of the Single Scheme Exclusion to Rico\u27s Pattern Requirement

The article discusses the role of Racketeer Influenced and Corrupt Organizations Act (RICO) during criminal proceedings which have both criminal and civil liability for violations of prohibited activities. The U.S. Supreme Court case H.J. Inc. v. Northwestern Bell Telephone Co. in which the Court rejected the Eighth Circuit\u27s requirement of multiple schemes. The U.S. Court of Appeal for the Eighth Circuit held that a single scheme is not sufficient to satisfy the continuity element

Entry, Pricing and Product Design in an Initially Monopolized Market

We analyze entry, pricing and product design in a model with differentiated products. Under plausible conditions, entry into an initially monopolized market leads to higher prices for some, possibly all, consumers. Entry can induce a misallocation of goods to consumers, segment the market in a way that transfers surplus to producers and undermine aggressive pricing by the incumbent. Post entry, firms have strong incentives to modify product designs so as to raise price by strengthening market segmentation. Firms may also forego socially beneficial product improvements in the post-entry equilibrium, because they intensify price competition too much. Multi-product monopoly can lead to better design incentives than the non-cooperative pricing that prevails under competition.

Collaborations and Partnerships in NASAs Earth Science Data Systems

NASA has been collecting Earth observation data from spaceborne instruments since 1960. Today, there are tens of satellites orbiting the Earth and collecting frequent global observations for the benefit of mankind. Collaboration between NASA and organizations in the US and other countries has been extremely important in maintaining the Earth observation capabilities as well as collecting, organizing and managing the data. These collaborations have occurred in the form of: 1. NASAs developing and launching spacecraft and instruments for operation by other agencies; 2. Instruments from collaborating organizations being flown on NASA satellites; and 3. Instruments from NASA being flown on satellites from collaborating organizations. In addition, there are collaborations such as joint science teams, data exchanges, and participation in international organizations to promote interoperability of various data systems. The purpose of this paper is to describe some of the Earth science data-related collaborative efforts in which NASA participates, and highlight a few results relevant to Earth system science research obtained through such collaborations

Progress and challenges in Mesothelioma: from bench to bedside

Malignant Pleural Mesothelioma (MPM) is currently an incurable cancer with a typical survival of 1 year from the time of diagnosis. The recent genomic and transcriptomic characterization of MPM presents new opportunities and challenges for MPM researchers. Recent advances in clinical and laboratory diagnostics, and proposals for an updated, data-driven, staging system, also present new challenges for clinicians and hospital services involved in MPM care. The aim of this review is first to introduce the reader to the topic of MPM, a disease that is causally linked to prior, typically occupational, exposure to asbestos fibres. Secondly, we will discuss MPM from the clinical and laboratory perspectives, including reviews of current and evolving therapies and our present understanding of the molecular basis of the disease. Finally, we will attempt to identify critical knowledge gaps that currently prevent more effective treatment, including the challenges involved in early detection and chemoprophylaxis

Monitoring Natural Events Globally in Near Real-Time Using NASA's Open Web Services and Tools

Since 1960, NASA has been making global measurements of the Earth from a multitude of space-based missions, many of which can be useful for monitoring natural events. In recent years, these measurements have been made available in near real-time, making it possible to use them to also aid in managing the response to natural events. We present the challenges and ongoing solutions to using NASA satellite data for monitoring and managing these events