Too Much Is Not Enough: Incentives in Executive Compensation

By Robert W. Kolb | Go to book overview

INDEX

A
Abnormal returns, 99–101
Figure 5.4, 101
Figure 8.1, 147
Accounting Principles Board
APB 25, 66–68, 75, 77, 79
Accounting rules. See also APB 25; FAS 123; FAS 123R
executive stock option (ESO), effect on, 66–69, 84
Acquisitions
and incentive compensation, 131–34
and risk, 118
Affective traits and risk, 118
Agency problems, remuneration as solution to, 28–29
Agency theory of the firm
and incentive alignment, 27–32
managerial power views, conceptual conflict between, 36–39
overview, 24–27
triangular nature of agency problem, 26–27
AIG, 8
Alexander, Jacob, 83
American option, 56–57, 74
plain vanilla options, 73
APB 25, 66–68, 75, 77, 79
Apple Computer
dollar pay, 5, 8
employees, retaining and attracting, 62–64
and repricing, 84–85
Arison, Micky, 95
Arison, Ted, 95
Arrow, Kenneth J., 45
Attracting employees, 62–64
Australia, exercise of stock options, 97

B
Backdating, 149–53
Figure 8.2, 149
firms scrutinized, 151, 152–53
“Bad behavior” of executives, 140–54
backdating, 149–53
Figure 8.2, 149
firms scrutinized, 151, 152–53
earnings management, 140–47
exploitation, 147–54
option games, 140, 147–54
Ballmer, Steve, 5, 95
Barnard, Chester, 172n4
“Base-case” ESO
defined, 70–71
and indexing, 78
multiple parameter changes, effect of, 74
Table 4.3, 75
prices, variance with stock price, 78–79
Figure 4.1, 79
pricing effect, 74–76
repricing and reloading, 81–82
Tables 4.1–4.2, 71–72
volatility, 70–72, 75
Bear Stearns, 93–94, 179n10
Bebchuk, Lucian
on corporate governance, 32–34, 36
on corporate risk management, 138
on executive stock option programs, 89, 93, 103
on Fannie Mae, 143–44
on managerial power approach to executive compensation, 37–40
Pay Without Performance: The Unfulfilled Promise of Executive Compensation, 32–33, 39
on pensions, 21–23
Beneficial nature of executive pay, 159–60
Berle, Adolf, 1–2
Bermudan options, 57
Binomial trees used to compute ESO values, 57
Binomial valuation method for executive stock options (ESOs), 163–65
Blackberry smart phones, 142
Black, Fischer. See Black-Scholes model
Blackout periods, 169n16
Black-Scholes-Merton (BSM) model, 69–70, 174n4
Black-Scholes model, 57–58, 85
Figure 3.6, 58

-209-

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