Executive Compensation/title> </head> <body> ______________________________ <div style="direction:ltr"> <wbr>______________________________<wbr>_____<br/> <br/> SOCIAL SCIENCE RESEARCH NETWORK<br/> <br/> EMPLOYEE BENEFITS, COMPENSATION & PENSION LAW ABSTRACTS<br/> Sponsored by Pension Governance, LLC<br/> Vol. 8, No. 35: October 11, 2007<br/> <br/> Editor: PAMELA J. PERUN<br/> Policy Director, Aspen Institute - Initiative on<br/> Financial Security<br/> <a href="mailto:PAMELA@PLANETNOW.COM">PAMELA@PLANETNOW.COM</a><br/> ______________________________<wbr>______________________________<wbr>_____<br/> <br/> BROWSE all abstracts in this subject:<br/> <a href="http://www.ssrn.com/link/benefits-compensation-pension-law.html" target="_blank">http://www.ssrn.com/link<wbr>/benefits-compensation-pension<wbr>-law.html</a><br/> <br/> SEARCH entire eLibrary at: <a href="http://ssrn.com/search" target="_blank">http://ssrn.com/search</a><br/> <br/> If this document is misaligned, please set type face to a<br/> non-proportional font such as Courier 10.<br/> ______________________________<wbr>______________________________<wbr>_____<br/> <br/> Pension Governance, LLC is an independent information and<br/> business consulting services and research/analysis company for<br/> the pension community. News, interviews, white papers, surveys,<br/> training and industry events provide pension decision-makers,<br/> their attorneys, actuaries, auditors, consultants, money managers<br/> and third party administrators with information that is<br/> straightforward and created with investment fiduciary best<br/> practices in mind. To learn more, please visit<br/> <a href="http://www.pensiongovernance.com/" target="_blank">http://www.pensiongovernance<wbr>.com</a>,<br/> <a href="http://www.pensionriskmatters.com/" target="_blank">http://www.pensionriskmatters<wbr>.com</a> (blog) and<br/> <a href="http://www.pensionlitigationdata.com/" target="_blank">http://www.pensionlitigationda<wbr>ta.com</a>.<br/> <br/> Topic of This Issue:<br/> Executive Compensation<br/> ______________________________<wbr>______________________________<wbr>_____<br/> <br/> T A B L E O F C O N T E N T S<br/> <br/> "How Much is Too Much? A Theoretical Analysis of Executive<br/> Compensation from the Standpoint of Distributive Justice"<br/> JARED D. HARRIS<br/> University of Virginia - Darden Graduate School of<br/> Business Administration<br/> <br/> "The Power of the Pen and Executive Compensation"<br/> JOHN E. CORE<br/> University of Pennsylvania - Accounting Department<br/> WAYNE R. GUAY<br/> University of Pennsylvania - Accounting Department<br/> DAVID F. LARCKER<br/> Stanford University<br/> <br/> "Does the Use of Peer Groups Contribute to Higher Pay and Less<br/> Efficient Compensation?"<br/> JOHN M. BIZJAK<br/> Portland State University - Department of Finance<br/> MICHAEL L. LEMMON<br/> University of Utah - Department of Finance<br/> LALITHA NAVEEN<br/> Temple University, Purdue University<br/> <br/> "Disclosure of the Fair Value of Executive Stock Options Granted<br/> to Top Executives"<br/> KEVIN C.K. LAM<br/> Chinese University of Hong Kong - School of Accountancy<br/> YAW M. MENSAH<br/> Rutgers Business School - Department of Accounting &<br/> Information Systems, Rutgers Business School - Janice<br/> Levin Building, Newark & New Brunswick<br/> <br/> "Two Goals for Executive Compensation Reform"<br/> BRETT MCDONNELL<br/> University of Minnesota Law School<br/> <br/> "Incentives to Cheat: The Influence of Executive Compensation and<br/> Firm Performance on Financial Misrepresentation"<br/> JARED D. HARRIS<br/> University of Virginia - Darden Graduate School of<br/> Business Administration<br/> PHILIP BROMILEY<br/> University of California, Irvine<br/> ______________________________<wbr>______________________________<wbr>_____<br/> <br/> "How Much is Too Much? A Theoretical Analysis of Executive<br/> Compensation from the Standpoint of Distributive Justice"<br/> THE ETHICS OF EXECUTIVE COMPENSATION, Robert W. Kolb, ed.,<br/> Chapter 4, pp. 67-86, Blackwell Publishing, 2006<br/> <br/> <br/> Contact: JARED D. HARRIS<br/> University of Virginia - Darden Graduate School of<br/> Business Administration<br/> Email: <a href="mailto:harrisj@darden.virginia.edu">harrisj@darden.virginia.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=857570" target="_blank">http://ssrn.com/author=857570</a><br/> <br/> Abstract: <a href="http://ssrn.com/abstract=1012670" target="_blank">http://ssrn.com/abstract<wbr>=1012670</a><br/> <br/> ABSTRACT: In analyzing the ethics of executive compensation, this<br/> paper examines the issue from the standpoint of three prominent<br/> theories of distributive justice. Applying each of these ?ideal?<br/> theories to the question of how to structure CEO pay illustrates<br/> a variety of different objections and considerations. Surveying<br/> the theories together in one analysis ? rather than considering<br/> each one independently ? reveals a certain amount of common<br/> ground among them. The theoretical analysis reveals a convergent<br/> conclusion about the importance of open and fair executive<br/> selection and compensation-setting processes to the establishment<br/> of an ethically appropriate level of executive pay.<br/> ______________________________<br/> <br/> "The Power of the Pen and Executive Compensation"<br/> Journal of Financial Economics (JFE), Forthcoming<br/> <br/> <br/> Author: JOHN E. CORE<br/> University of Pennsylvania - Accounting Department<br/> Email: <a href="mailto:jcore@wharton.upenn.edu">jcore@wharton.upenn.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=27767" target="_blank">http://ssrn.com/author=27767</a><br/> <br/> Contact: WAYNE R. GUAY<br/> University of Pennsylvania - Accounting Department<br/> Email: <a href="mailto:guay@wharton.upenn.edu">guay@wharton.upenn.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=44282" target="_blank">http://ssrn.com/author=44282</a><br/> <br/> Co-Author: DAVID F. LARCKER<br/> Stanford University<br/> Email: <a href="mailto:Larcker_David@gsb.stanford.edu">Larcker_David@gsb.stanford.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=49762" target="_blank">http://ssrn.com/author=49762</a><br/> <br/> Abstract: <a href="http://ssrn.com/abstract=1014447" target="_blank">http://ssrn.com/abstract<wbr>=1014447</a><br/> <br/> ABSTRACT: We examine the press' role in monitoring and<br/> influencing executive compensation practice using more than<br/> 11,000 press articles about CEO compensation from 1994 to 2002.<br/> Negative press coverage is more strongly related to excess annual<br/> pay than to raw annual pay, suggesting a sophisticated approach<br/> by the media in selecting CEOs to cover. However, negative<br/> coverage is also greater for CEOs with more option exercises,<br/> suggesting the press engages in some degree of ?sensationalism.?<br/> We find little evidence that firms respond to negative press<br/> coverage by decreasing excess CEO compensation or increasing CEO<br/> turnover.<br/> ______________________________<br/> <br/> "Does the Use of Peer Groups Contribute to Higher Pay and Less<br/> Efficient Compensation?"<br/> Journal of Financial Economics (JFE), Forthcoming<br/> <br/> <br/> Contact: JOHN M. BIZJAK<br/> Portland State University - Department of Finance<br/> Email: <a href="mailto:johnb@sba.pdx.edu">johnb@sba.pdx.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=1353" target="_blank">http://ssrn.com/author=1353</a><br/> <br/> Co-Author: MICHAEL L. LEMMON<br/> University of Utah - Department of Finance<br/> Email: <a href="mailto:finmll@business.utah.edu">finmll@business.utah.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=17206" target="_blank">http://ssrn.com/author=17206</a><br/> <br/> Co-Author: LALITHA NAVEEN<br/> Temple University, Purdue University<br/> Email: <a href="mailto:lnaveen@temple.edu">lnaveen@temple.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=107127" target="_blank">http://ssrn.com/author=107127</a><br/> <br/> Abstract: <a href="http://ssrn.com/abstract=1017338" target="_blank">http://ssrn.com/abstract<wbr>=1017338</a><br/> <br/> ABSTRACT: We provide empirical evidence on how the practice of<br/> competitive benchmarking affects CEO pay. We find that the use of<br/> benchmarking is widespread, and has a significant impact on<br/> levels and changes in CEO compensation. The practice is<br/> controversial and one view is that it is inefficient because it<br/> can lead to increases in executive pay not tied to firm<br/> performance. A contrasting view is that benchmarking can be a<br/> practical and efficient mechanism to gauge the market wage<br/> necessary to retain valuable human capital. Our empirical results<br/> generally support the latter view. Our results also suggest that<br/> the documented asymmetry between CEO pay and luck is more likely<br/> to reflect the firm's desire to adjust pay for retention purposes<br/> and is not the result of rent seeking behavior on the part of the<br/> CEO.<br/> ______________________________<br/> <br/> "Disclosure of the Fair Value of Executive Stock Options Granted<br/> to Top Executives"<br/> <br/> Author: KEVIN C.K. LAM<br/> Chinese University of Hong Kong - School of<br/> Accountancy<br/> Email: <a href="mailto:kevinl@baf.msmail.cuhk.edu.hk">kevinl@baf.msmail.cuhk.edu.hk</a><br/> Auth-Page: <a href="http://ssrn.com/author=334533" target="_blank">http://ssrn.com/author=334533</a><br/> <br/> Contact: YAW M. MENSAH<br/> Rutgers Business School - Department of Accounting<br/> & Information Systems, Rutgers Business School -<br/> Janice Levin Building, Newark & New Brunswick<br/> Email: <a href="mailto:mensah@rbsmail.rutgers.edu">mensah@rbsmail.rutgers.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=47051" target="_blank">http://ssrn.com/author=47051</a><br/> <br/> Full Text: <a href="http://ssrn.com/abstract=1018041" target="_blank">http://ssrn.com/abstract<wbr>=1018041</a><br/> <br/> ABSTRACT: This paper examines the determinants of a company's<br/> choice of disclosure informativeness. The specific context is the<br/> disclosure of the value of stock options granted to the top<br/> executives under the SEC's Regulation S-K (Item 403). We show<br/> that firms with executives who are excessively paid,<br/> poorly-performing firms, and firms which are substantially owned<br/> by insiders, are more likely to choose the less informative<br/> disclosure method. On the other hand, larger firms, firms which<br/> are widely covered by analysts, firms with high financial<br/> leverage, and those which voluntarily expense their executive<br/> options, are more likely to choose the more informative<br/> disclosure. We also provide evidence that firms with higher<br/> accounting integrity command a higher market valuation.<br/> ______________________________<br/> <br/> "Two Goals for Executive Compensation Reform"<br/> New York Law School Law Review, Vol. 52, 2007<br/> Minnesota Legal Studies Research Paper No. 07-34<br/> <br/> <br/> Contact: BRETT MCDONNELL<br/> University of Minnesota Law School<br/> Email: <a href="mailto:bhm@umn.edu">bhm@umn.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=94918" target="_blank">http://ssrn.com/author=94918</a><br/> <br/> Full Text: <a href="http://ssrn.com/abstract=1008356" target="_blank">http://ssrn.com/abstract<wbr>=1008356</a><br/> <br/> ABSTRACT: Most corporate law scholars who suggest reforming<br/> executive compensation worry about corporate governance problems<br/> that arise out of poor compensation design. Most politicians who<br/> suggest reforming executive compensation seem as or more worried<br/> about growing economic inequality. This essay briefly considers<br/> two arguments justifying legal scholars in ignoring the concern<br/> with inequality. The first argument says that we should address<br/> inequality concerns only through tax and transfer policy. This<br/> essay responds that politics may dictate sometimes trying to<br/> reduce inequality through other means as well. The second<br/> argument claims that high pay for the top executives of public<br/> corporations has played only a small role in the growth of<br/> economic inequality. This essay finds this argument much more<br/> persuasive, but suggests reasons why further empirical<br/> investigation may still show that reforming executive<br/> compensation may be a modestly important part of a broader<br/> package of reforms to reduce inequality.<br/> ______________________________<br/> <br/> "Incentives to Cheat: The Influence of Executive Compensation and<br/> Firm Performance on Financial Misrepresentation"<br/> Organization Science, Vol. 18, No. 3, pp. 350-367<br/> <br/> <br/> Contact: JARED D. HARRIS<br/> University of Virginia - Darden Graduate School of<br/> Business Administration<br/> Email: <a href="mailto:harrisj@darden.virginia.edu">harrisj@darden.virginia.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=857570" target="_blank">http://ssrn.com/author=857570</a><br/> <br/> Co-Author: PHILIP BROMILEY<br/> University of California, Irvine<br/> Email: <a href="mailto:bromiley@uci.edu">bromiley@uci.edu</a><br/> Auth-Page: <a href="http://ssrn.com/author=857581" target="_blank">http://ssrn.com/author=857581</a><br/> <br/> Abstract: <a href="http://ssrn.com/abstract=1010197" target="_blank">http://ssrn.com/abstract<wbr>=1010197</a><br/> <br/> ABSTRACT: Despite the many undesirable outcomes of corporate<br/> misconduct, scholars have an inadequate understanding of<br/> corporate misconduct's causes and mechanisms. We extend the<br/> behavioral theory of the firm, which traditionally assumes away<br/> the possibility of firm impropriety, to develop hypotheses<br/> predicting that top management incentive compensation and poor<br/> organizational performance relative to aspirations increase the<br/> likelihood of financial misrepresentation. Using a sample of<br/> financial restatements prompted by accounting irregularities and<br/> identified by the U.S. Government Accountability Office, we find<br/> empirical support for both incentive and relative performance<br/> influences on financial statement misrepresentation. </div> </body> </html>