If you were to start from scratch, how would you define and design an optimal executive (CEO) pay package?
In your opinion, are CEO raises and pay levels justified? Are they “optimal”? How would you define an optimal pay package?
Facebook had an accounting change that resulted in a $900 million boost to earnings. The FASB now requires “excess tax benefits” from stock options to flow through the income statement, rather than APIC. Does the change improve financial reporting? How?
Do you think it is appropriate to hold individuals (such as a named CFO) liable for errors in financial reporting? Why or why not? What are the consequences for bringing talented individuals into CFO roles?
The “Dodd-Frank” legislation was enacted largely because of the financial crisis of 2008. What is your opinion about, for example, the following: 1) say-on-pay 2) insiders hedging company stock 3) pay-ratio disclosure 4) conflict minerals disclosure? Should these provisions be maintained? Why or why not? Who benefits from these disclosures?
If you were on the compensation committee of your firm’s board, would you require indexing equity based compensation? If you were CEO, would you be against it? If so, how would you argue against it?
If you were CEO, and if you believe the results of the research that suggests that explicitly mentioning “shareholder value” in your annual letter to shareholders affects your compensation, how would you write your letter?(!)
What is the purpose of “clawing back” pay to executives and other employees? Do you find the idea substantive? Symbolic? How would you determine how much to claw back? What behaviors should trigger a claw back, if any?
Do you think the FASB should use Actual Realized Gains (ARG) in measuring equity compensation expense, rather than Estimated Fair Value (EFV)? What would be the advantages/disadvantages of ARG over EFV?
If you were a C-suite exec, would you want your bonus calculated on GAAP results or pro forma results?
Pay is increasing significantly for accounting and finance professionals. Does this help you to keep doing boring homework?
There is a “dearth of talent” in technology companies. Pay is increasing, including the use of stock-based compensation. Would you want stock (stock options/restricted), or would you prefer cash? How would the choice affect your behavior on the job?
Relative to restricted stock compensation, why are stock options “becoming more out of favor with shareholder advocacy groups”? Do you think this is justified? Why?
The FASB changed how firms record excess tax benefits or tax deficiencies associated with stock options and restricted stock. How does using an income account (tax expense/tax benefit), rather than APIC, simplify the process? Do you believe users of financial statements will react to the change? If so, how? What will be the associated effect on Diluted EPS?
Median CEO pay shrank YOY. The structure of the compensation packages changed somewhat as well. How would you design the pay package of your firm’s CEO? If you were CEO of a firm, what would be your “optimal” pay package?
Should bankers’ bonuses be held back for 3 years in case a clawback is needed? Should it be 5 years? 10 years? Who should be included in the withheld bonuses? What do you think could be some of the unintended consequences of holding back bonuses?
GE’s CEO missed a performance target and therefore did not receive all of his performance compensation, which was in the form of stock awards. In your opinion, should the pay have been in the form of stock options, instead of stock awards (restricted stock)? Why or why not?
If you were an employee at a firm who offered you stock options or additional cash as compensation, which would you choose? Why? Would the stock option compensation be, as suggested, getting paid in lottery tickets?
Do you think your decisions would be affected and behavior change if you were a CEO that was paid “a lot” in stock options, relative to restricted stock? How? Why? Would it affect your “moral compass”?
Executives are switching away from options to restricted stock. Why? Is this change in executive compensation a “good” thing for corporate governance? Why or why not?
