Executive Compensation: Accounting and Economic Issues

ISBN-13: 9781606498781 / Angielski / Miękka / 2014 / 120 str.

Gary Giroux

Opis

The chief executive officer (CEO) of a corporation and her executive team are responsible for the management of the business and its continued financial success. This team is almost always highly compensated and the relative total compensation has mushroomed over time. Most of the compensation now is designed to be performance-based; but this structure leads to charges that it provides executives with incentives to manipulate short term corporate earnings and stock prices to serve their own compensation self interests. The book explores this premise and provides guidance into how such determinations are made. Three key points are emphasized in this book. First is the role that accounting and disclosure play in informing the process of determining executive compensation. Second is the recognition that executive compensation can affect corporate behavior in a variety of ways; and finally, there is the acknowledgement that executive compensation cannot be fully understood without one first becoming familiar with economic theory and empirical research related to compensation models. Because the rationale for executive compensation and the way it is viewed has changed over time, this book adopts a historical/chronological perspective. This perspective allows the book to make several observations about the state of executive compensation and how public disclosures about it have been demanded and have increased over time. The business culture and institutional framework for compensation of top executives has changed dramatically since the 1930s, with important ramifications. Types and amounts of executive pay have bounced up and down based on tax laws, regulatory changes and executive self-interest, as executives find new ways to be paid more. Yet research has shown that, despite some notable excesses, overall executive compensation is often more reasonable than recent perceptions would suggest.

The chief executive officer (CEO) of a corporation and his or her executive team are responsible for the management of the business and its continued operating and financial success. The CEO and executive team are almost always highly compensated and the relative total compensation has mushroomed over time. Most of the compensation now is designed to be performance-based, but leading to charges that executives have incentives to manipulate corporate earnings and stock price in the short-term for their own self interests. The compensation at some companies became so egregious that compensation again became a major public policy issue subject to federal regulation. Executive Compensation focuses on the major topics related to executive compensation-present, past, and future. First, is understanding what executive compensation is, including composition and objectives of pay contracts. Second, how do specific compensation agreements affect corporate behavior and performance? Third, what are the major components, including how and what are accounted for and disclosed? How is compensation, especially executive compensation, accounted for-that is, what are the calculations and journal entries required? Fourth, what does historical analysis tell us about the topic, especially how contractual decisions have been made and what has worked. Finally, what is in store for the future-both expected compensation agreements and what the compensation incentives suggest for future corporate decisions on operations and accounting manipulation.