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?
Are share repurchases “investments” in a firm’s own stock? Are they a form of “financial engineering”? What do you think is the real reason for the surge?
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?
EBITDA, a non-GAAP measure, is apparently being tweaked, to make it “more” (?) non-GAAP. Should investors be concerned? Should investors be using cash based measures that are harder for firms to tweak? Should the government oversee non-GAAP metrics?
Firms who are “heavy users” of non-GAAP (pro forma) earnings measures (“EBBS”) seem to have a higher propensity of accounting problems, resulting in accounting restatements. What might be the connection? If the relation between use of non-GAAP measures and accounting problems is established to be systematic, what do you propose as a solution?
Why do you think Electronic Arts decided to discontinue reporting non-GAAP measures? Who benefits from this? Who loses? Do you think their decision is a good one?
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?
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”?
Oracle cut the expiration date of its stock option grants from 10 years to 5. Why? What does this do to the value of the options? Why is the value affected in this way?
Why do you suppose that analysts ignore Facebook’s GAAP-based earnings (which most recently was a net loss) and instead focus on pro forma earnings, or earnings before stock based compensation expense?
In what way is restricted stock compensation a “fixed cost”? Does restricted stock affect diluted EPS as do stock options?
Should the corporate tax deduction for stock options be eliminated? How would the elimination of the deduction result in double taxation of options? How do you think corporations would respond if the deduction were eliminated?
What is your opinion about this “give-it-back, or else” demand from Zynga? What are the implications for Zynga?
How did Apple’s board determine that the amount “necessary” to keep these six employees from leaving would be $360 million ($60 million each)? Should Apple’s board reward investors too by paying a dividend?
