By Steven Balsam
Normal readers don't know why humans should still care approximately what executives are paid and why they're paid the way in which they're. that is the reason that The Wall highway magazine, Fortune, Forbes, and different well known and practitioner courses have general insurance on them. This e-book not just proposes a reason--executives desire incentives so that it will maximize company price (economists name this "agency theory")--it additionally describes the character and layout of government reimbursement practices. these incentives can take the shape of advantages (salary, inventory options), perquisites (reflecting the prestige of the administrative in the organizational tradition.
This publication is necessary since it takes the weather of an govt reimbursement package deal aside, examining them within the contexts of either fiscal thought and company perform after which explains how, less than various stipulations, one could build a reimbursement package deal that optimizes an executive's and a corporation's functionality.
* provides an aim research of present govt reimbursement practices
* Comprehensively experiences of educational literature and extant practice
* Explains and illustrates some of the elements of the repayment package
* Discusses the motivation, monetary reporting, tax, political, fairness, and enterprise worth results of these components
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Additional resources for An Introduction to Executive Compensation
6) Omission of Table or Column. A table or column may be omitted, if there has been no compensation awarded to, earned by or paid to any of the named executives required to be reported in that table or column in any fiscal year covered by that table. (7) Definitions. For purposes of this item: (i) The term stock appreciation rights (‘‘SARs’’) refers to SARs payable in cash or stock, including SARs payable in cash or stock at the election of the registrant or a named executive officer. (ii) The term plan includes, but is not limited to, the following: any plan, contract, authorization or arrangement, whether or not set forth in any formal documents, pursuant to which the following may be received: cash, stock, restricted stock or restricted stock units, phantom stock, stock options, SARs, stock options in tandem with SARs, warrants, convertible securities, performance units and performance shares, and similar instruments.
Other Stock-Based Forms of Compensation Although not as popular as stock options and grants, some companies grant stock appreciation rights (SARs), phantom stock, and/or equity units. Stock appreciation rights are the right to receive the increase in the value of a specified number of shares of common stock over a defined period of time. Economically they are equivalent to stock options, with one exception. 9 Thus the executive is able to realize the benefits of a stock option without having to purchase the stock.
They are often used in privately held corporations or publicly held corporations, where the owners do not want to dilute existing ownership. Equity units entitle the holder to purchase common stock at its book value, and then resell the stock to the corporation at their book value at a later date. The owner also gets the dividend payments on the stock. Like phantom stock, equity units are often used in privately held corporations, or publicly held corporations, where the owners do not want to dilute existing ownership.
An Introduction to Executive Compensation by Steven Balsam