Law Commons^™

Intrafirm Monitoring Of Executive Compensation, Robert J. Rhee

Vanderbilt Law Review

This Article argues that employees should serve as intrafirm monitors of executive performance and pay. Employees and shareholders, labor and capital, can monitor executive performance and pay at different levels. Diffuse, diversified, and short durational shareholders currently monitor performance and pay through the market mechanism of public disclosures and share price. Employees can add an effective layer of monitoring by leveraging private information. Employees possess the corporation's entire information content; the assessment derived from this content would be relevant to the board's assessment of executive performance and pay. Corporate employees are also a major constituent of the corporate system and …

Symposium On Executive Compensation Keynote Address, Kenneth R. Feinberg

Vanderbilt Law Review

I want to thank Richard Nagareda for inviting me to Vanderbilt; he's an old friend. I am very honored to return to Vanderbilt. I taught a course at Vanderbilt, and I loved teaching here. I loved going to the Country Music Hall of Fame and learning more about Patsy Cline and Johnny Cash. Really, it was great. I've already received an invitation from Dean Jim Bradford to come back to the business school and the law school and to participate in an interdisciplinary look at executive compensation. I hope to return. But when I saw that the Vanderbilt Law Review …

Executive Compensation Consultants And Ceo Pay, Martin J. Conyon

Vanderbilt Law Review

This Article surveys recent empirical studies on the relation between compensation consultants and CEO pay. The economic rationale for using executive compensation consultants is that they supply valuable data, information, and professional expertise to client firms. However, critics argue that the consultant's independence might be compromised because of conflicts of interest arising from the cross selling of business services or because of the consultant's desire to obtain repeat business. The emergent empirical evidence suggests that pay consultants are important in explaining executive compensation, although the findings are sometimes mixed and the precise effects of consultants on pay are yet to …

Economics, Politics, And The International Principles For Sound Compensation Practices: An Analysis Of Executive Pay At European Banks, Guido Ferrarini, Maria C. Ungureanu

Vanderbilt Law Review

In this Article, we submit that the compensation structures at banks before the financial crisis were not necessarily flawed and that recent reforms in this area largely reflect already existing best practices. In Part I we review recent empirical studies on corporate governance and executive pay at banks and suggest that there is no strong support for regulating bankers' compensation structures. We also argue that detailed regulation of incentives would subtract essential decisionmaking powers from boards of directors and make compensation structures too rigid.

In Part II we note that political support for regulating bankers' pay has been strong and …

Evolving Executive Equity Compensation And The Limits Of Optimal Contracting, David I. Walker

Vanderbilt Law Review

Executive equity compensation in the United States is evolving. At the turn of the millennium, stock options dominated the equity pay landscape, accounting for over half of the aggregate ex ante value of senior executive pay at large public companies, while restricted stock and similar compensation accounted for only about ten percent. Beginning in 2006, stock grants have displaced options as the single largest component of senior executive compensation at these firms. Accompanying this shift has been increased variation among companies in their relative emphasis on stock and options in equity pay packages. Both phenomena provide an opportunity for a …

Executive Compensation In The Courts: Board Capture, Optimal Contracting, And Officers' Fiduciary Duties, Randall Thomas, Harwell Wells

Vanderbilt Law School Faculty Publications

This Article proposes a new approach to monitoring executive compensation. While the public seems convinced that executives at public corporations are paid too much, so far attempts to rein in executive compensation have met with little success. Several approaches have been tried - requiring large pay packages to consist predominantly of incentive pay, new procedures for approving pay, mobilization of public outrage at giant compensation packages. None, however, has stemmed the growth of executive compensation, or convinced opponents of large pay packages that such pay is either fair or deserved. Here we suggest a new approach, one that turns to …

The Case Of Ceo Richard Grasso And The Nyse: Proposals For Controlling Executive Compensation At Public Nonprofit Corporations, Rachel Penski

Vanderbilt Law Review

In August 2003, for the first time in its 200-year history, the New York Stock Exchange (NYSE) announced the compensation package for its Chairman and Chief Executive Officer. The NYSE's Board of Directors revealed in a press release that it had distributed $139.5 million in deferred compensation to its CEO Richard Grasso. This payment was in addition to a base salary of $1.4 million with an annual bonus of $1 million. Due to the Exchange's status as a nonprofit corporation, Grasso's payout "led to an outcry, as [his compensation was] more in line with what chief executives of public corporations …

The Determinants Of Shareholder Voting On Stock Option Plans, Randall S. Thomas, Kenneth J. Martin

Vanderbilt Law School Faculty Publications

Over the past decade, executive compensation has become a controversial topic. Increasingly, corporate boards of directors are confronted by angry shareholder groups over the size and composition of executive pay packages. One of the most important focal points for these tensions arises when shareholders are asked by the board to approve the creation of new stock option plans, or the amendment of existing plans. This article seeks to identify the factors that lead shareholders to support or oppose stock option plans. We examine the justifications for the widespread use of stock options and identify several benefits from stock option plans …

Stock Options And Other Executive Incentive Arrangements, Charles W. Steadman

Vanderbilt Law Review

The immense economic expansion and changes of the post-war period have generated numerous problems. In American business a major product of this is to be found in the difficulty of developing and maintaining the reservoir of executive talent at levels sufficiently high that managerial functions can continue to be performed with an advanced degree of efficiency. The shortage of qualified executives has been widely reported. The competition for those available is intense and increasing.

Unfortunately, it would seem that at the very time the need is greatest the normal incentives for an individual to assume major executive status have been …