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.

Role of community health workers in type 2 diabetes mellitus self-management: A scoping review

Background: Globally the number of people with Type 2 diabetes mellitus (T2DM) has risen significantly over the last few decades. Aligned to this is a growing use of community health workers (CHWs) to deliver T2DM self-management support with good clinical outcomes especially in High Income Countries (HIC). Evidence and lessons from these interventions can be useful for Low- and Middle-Income countries (LMICs) such as South Africa that are experiencing a marked increase in T2DM prevalence. Objectives: This study aimed to examine how CHW have been utilized to support T2DM self-management globally, their preparation for and supervision to perform their functions. Method: The review was guided by a stepwise approach outlined in the framework for scoping reviews developed by Arksey and O’Malley. Peer reviewed scientific and grey literature was searched using a string of keywords, selecting English full-text articles published between 2000 and 2015. Articles were selected using inclusion criteria, charted and content analyzed. Results: 1008 studies were identified of which 54 full text articles were selected. Most (53) of the selected studies were in HIC and targeted mostly minority populations in low resource settings. CHWs were mostly deployed to provide education, support, and advocacy. Structured curriculum based education was the most frequently reported service provided by CHWs to support T2DM self-management. Support services included informational, emotional, appraisal and instrumental support. Models of CHW care included facility linked nurse-led CHW coordination, facility-linked CHW led coordination and standalone CHW interventions without facility interaction. Conclusion: CHWs play several roles in T2DM self-management, including structured education, ongoing support and health system advocacy. Preparing and coordinating CHWs for these roles is crucial and needs further research and strengthening

Are CEOs Really Paid Like Bureaucrats?

A common view is that there is little correlation between firm performance and CEO pay. Using a new fifteen-year panel data set of CEOs in the largest, publicly traded U.S. companies, we document a strong relationship between firm performance and CEO compensation. This relationship is generated almost entirely by changes in the value of CEO holdings of stock and stock options. In addition, we show that both the level of CEO compensation and the sensitivity of compensation to firm performance have risen dramatically since 1980, largely because of increases in stock option grants. © 2000 the President and Fellows of Harvard College and the Massachusetts Institute of Technology