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CEO Utility Pay Literature Review

1,781 bytes added, 22:48, 25 January 2016
Pay for performance? Government regulation and the structure of compensation contracts
===Pay for performance? Government regulation and the structure of compensation contracts===
[http://www.sciencedirect.com/science/article/pii/S0304405X01000836 T. Perry and M. Zenner, “Pay for performance? Government regulation and the structure of compensation contracts,” Journal of Financial Economics, vol. 62, no. 3, pp. 453–488, Dec. 2001.]
*in 1992/93 the SEC and congress increased regulation and visibility on CEO compensation of large firms. They are now given less tax breaks on non performance based pay and are required to report more information*Propositions investigated::#CEO compensation levels decrease following the adoption of 162(m) (the regulations) and the SEC disclosure changes::*All compensation components increased over the period, showing that the regulations did not change overall CEO pay levels::*The regulations may have put pressure to slow growth or decrease salary of larger firms:#Salaries above or nearing the million-dollar range are less likely to increase than salaries below the million-dollar mark.::*only suggestive results that this may be the case. nothing conclusive:#Firms reduce salaries above 1 million dollars because of the regulations::*The findings show that the regulations did not significantly cut salaries (some did get cut citing the regulations, but many went up):#Salaries nearing the million-dollar range increase less than salaries below the million-dollar range.::*Salaries close to the mark have lower growth rates:#Performance sensitive components of compensation, such as bonus and stock-based compensation, have become more important after 1993::*Trends seem to be consistent, no quantitative values:#Increased shareholder scrutiny through enhanced disclosure and 162(m) will lead to an increase in the sensitivity of pay to performance after 1993, especially for firms subject to 162(m) *CEO performance is measured by firms in ways including::*net income:*net profit:*Profit minus nonreoccuring events:*Earnings per share:*sales:*return on equity (ROE):*shareholder returns:*cash flows:*Return on assests (ROA):*Profit MArgin:*dividends
===CEO compensation, diversification, and incentives===
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