Market-based Compensation Research Articles

Rethinking “On Just Terms”: Commonwealth v Yunupingu

Commonwealth v Yunupingu raises a number of constitutionally significant issues concerning the scope of the Commonwealth Parliament’s power under s 51(xxxi) of the Australian Constitution and its relationship to the territories power in s 122. One issue that is not directly raised by the questions before the High Court of Australia, but that will nevertheless inform the Court’s answers, concerns the meaning of ‘on just terms’. Is ‘on just terms’ a narrow and inflexible requirement to provide full market-based compensation? Or does it permit a broader and more flexible approach to determining the obligations of the Commonwealth and territory governments, which would allow for structural reparations and non-pecuniary remedies? We suggest that a broader and more flexible approach is generally to be preferred as a matter of both principle and prudence and that such an approach is especially relevant for the Court as it considers the consequences of its answers to the questions before it.

An Analysis of the Impact of Insider Trading on Executive Compensation in Listed Companies Based on VAR Modeling

Abstract In this paper, we first establish a VAR model, screen the variables using the CSIS method so as to achieve fast dimensionality reduction, and use the cointegration theory to model non-stationary time variables to determine the pseudo-regression analysis between variables. Impulse response functions and variance decomposition are then used to analyze the dynamic effects of changes in random disturbance terms on the whole system and other variables. Finally, the effects of insider trading on executive compensation are explored using corporate performance and market-based executive pay entitlement as references, respectively. The results show that the regression coefficients of executive compensation level and cumulative excess turnover rate of the event announcement period are 0.805 and 0.018 for corporate performance and market-based compensation, respectively, and the higher the level of executive compensation based on corporate performance and market-based compensation, the lower the impact of insider trading on executive compensation. Equity incentives reduce the impact of insider trading on executive compensation, and the regression coefficient of excess turnover on executive compensation is less than 0 in firms with shareholding levels higher than 10%.

Developing a sustainable career for designers by using the salary-skills relationship for Chinese designers

The value of designers is determined by market-based compensation which reflects the status of the design industry, the career paths of designers, reform directions in design education and the deconstruction of design skills. This article aims to elucidate designers' requirements, responsibilities and compensation by scrutinizing online job advertisements. Previous studies have focused on macro design aspects such as propaganda and procedural methods, neglecting individual designers' compensation and treatment. This study used Python technology to search for online job and analyzed 1,108 good job postings using content analysis and descriptive statistics. Additionally, interviews were conducted to investigate the skill requirements of company designers. The findings revealed vital skill points that contribute to increased salaries for designers. High-paid designers possess core skills in managing design strategies and business processes. Middle-paid designers demonstrate abilities in executing design projects and working in teams. Low-paid designers perform better and have better software capabilities. The research’s findings guide students in choosing their majors and research options and identify core skills for designers already in the workforce. Furthermore, this study offers objective data for enterprise talent acquisition and development strategies.

Dynamic Analysis and Simulation of the Feasibility and Stability of Innovative Carbon Emission Reduction Projects Entering the Carbon-Trading Market

Designing green agricultural production projects as CER projects is attractive, as it can play a role in promoting the spread of green production technologies and reducing carbon emissions based on market-based compensation. This research constructed a generic analytical framework using evolutionary game methods to evaluate the feasibility and stability of innovative CER projects by numerical analysis or simulation. Finally, two complex scenarios were analysed using simulations based on the framework. The simulation analysis results show that when the profits of VER and CER projects are close, the government’s direct intervention will lead to instability in market development, and the development of VER projects should be focused on. Government subsidies to promote the agricultural sector to participate in CER construction can be gradually reduced with the development of the market. When the reduction speed is slow enough, the effectiveness of subsidies will not be affected. The framework will be helpful to evaluate the feasibility and effectiveness of CER mechanism innovation and development, and to formulate more targeted policies to promote the popularization of green agricultural production technologies.

Residential rooftop solar demand in the U.S. and the impact of net energy metering and electricity prices

We use a panel dataset of residential rooftop solar adoption for 27 states from 2008 to 2018 to estimate demand for rooftop solar and the impact of net energy metering compensation. We find demand is highly price elastic and that income is elastic as well. We find a large cross-price effect with respect to residential electricity price indicating that rooftop solar is a strong substitute for utility-provided electricity driven, in part, by poor residential rate design that primarily recovers fixed system costs through volumetric charges. We find that net energy metering has a large positive impact on the demand for residential rooftop solar, resulting in at least a doubling of demand and in uneconomic customer bypass of utility-supplied electricity, as net energy metering is not a market-based compensation rate. Our analysis lends support to ongoing state policy efforts to reform net energy metering and to improve electricity rate design.

Algorithm of Ecocompensation in Sloping Land Conversion Program Based on Heckman’s Two-Step Model

In this paper, we broadly generalize the assignment auction algorithm to solve linear minimum cost network flow problems. It is significant to establish a market-based compensation mechanism by way of conservation auctions based on peasant households’ willingness, which can promote the innovation of ecocompensation policies, green development, and balanced growth. Using the survey data collected from 453 households within 3 national pilot counties in ecologically fragile regions in northwest Liaoning for the Sloping Land Conversion Programme, measuring peasant households’ willingness to accept ecocompensation through sealed auctions, we built a database through cloud computing to realize information collation and query and applied the Heckman’s Two-Step Model to study the impact of risk preference, social capital, cognitive preference, land parcel characteristics, and family endowments on farmers’ willingness to participate in protection auctions and their bid prices. The results reveal that the average bid price of peasant households in the ecologically fragile region in northwest Liaoning for the Sloping Land Conversion Programme is annually 274.5 yuan per mu and that risk preference and social capital have positive impacts on peasant households’ willingness to participate in conservation auctions and on their bid prices, cognitive preference has a positive impact on peasant households’ bid prices in conservation auctions, and land plot characteristics have a negative impact on peasant households’ bid prices in conservation auctions. It is suggested that ecocompensation policies should be optimized with such methods as lowering peasant households’ perception of high risks, setting role models for them to follow, and strengthening their perception of the environment, income, and property rights.

Research on Optimization of Compensation System for Employment Satisfaction of Henan CITIC Big Data Technology

With the progress and development of the times, human resource management has become more complex. A compensation system that could attract and retain talented people would be necessary for cultivating and effectively utilizing talents through human resource management to obtain the core competitiveness of the organization. It could also be an issue that every enterprise and its managers must pay attention to at present. Based on the concepts of the compensation system related to job-based compensation, performance-based compensation, skill-based compensation, market-based compensation, and annual merit-based compensation.

Time to adopt a context-specific and market-based compensation scheme for a new round of the Grain for Green Program

With the imminent rollout of the latest round of China’s Grain for Green Program (GFGP), two primary questions remain to be addressed: Was the vegetation recovery achievement of the past two decades attributable to the program, or to climate change? How could a more flexible compensation scheme, that would improve the efficiency of the GFGP, be designed? Using China’s Loess Plateau region as a case study, we developed ordinary panel and panel threshold models to examine the effects of the GFGP on vegetation recovery, as well as the relationship between local economic growth and vegetation cover change, from 2002 to 2017. We found that a combination of climate warming and humidification contributed the most to vegetation recovery on the Loess Plateau, while the positive effect of the GFGP may be exaggerated. We also identified double thresholds in the effect of economic growth on vegetation change. As the relative contribution of the primary sector output to the local GDP decreased, the impact of economic growth on vegetation status changed from negative to positive, and the positive effect first increased and then decreased. These findings suggest that a new, more context-specific and market-based approach should replace the original ‘one-size-fits-all’ in the compensation scheme for the new round of the GFGP. Additional consideration should be given to contextual differences in local economic development, industrial structure, and the availability of alternative livelihood sources for the enrolled farmers.

The role of the Valuer-General in the calculation of compensation for expropriation: A comparative analysis between South African and Australian law

Property valuations have always played an important role in the calculation of compensation for expropriation. The shift from market-based compensation towards just and equitable compensation prescribed by s 25 of the South African Constitution poses important questions as to the role of a valuation in calculating compensation for property expropriated for land reform purposes. The Property Valuation Act of 2014 established the Valuer-General to determine the value of these properties according to the formula reserved for the determination of just and equitable compensation, leading to contestation regarding its role in determining compensation. Recent case law clarified that the valuation does not prevent the Minister from paying compensation that differs from the value determined by the Valuer-General nor does it bind the courts when called on to determine compensation under s 42 D of the Restitution Act. The role of the Valuer-General remains unclear when expropriation proceedings are initiated by the state. This article analyses the function of statutory valuation bodies in Australian law to determine compensation for compulsory acquisition as persuasive authority to further guide the interpretation of the Property Valuation Act.

The Best of Both Worlds: Compensation via Price-Caps for Passed-On Overcharges

AbstractWe present a market-based compensation approach to antitrust litigation and other cases of price overcharges. Instead of lump-sum compensation, paid either directly or through coupons, defendants are required to lower their prices for a certain designated period, i.e. price-cap compensation (PCC). We show why previous criticism of PCC was misguided. And, in sharp contrast to the common view in the literature, implementing PCC may have many substantive and procedural advantages. Importantly, although PCC is implemented vis-à-vis direct purchasers only, it reconciles the U.S. and European Union legal approaches and solves the challenge of passed-on damages to indirect purchasers.

Acquiescence in the face of dispossession in the Mahindra World City Special Economic Zone, Tamil Nadu, India

Scholarship on community responses to land grabs for Special Economic Zones (SEZs) has overwhelmingly analysed cases of mobilization against SEZs or the subsequent trajectories of anti-dispossession struggles. We build on the role of the neoliberal broker state developed within this scholarship as well as theories on state and capital rescaling, and quiescence to power to explain the production of acquiescence to dispossession. Our in-depth case study of a large SEZ, the Mahindra World City (MWC) in Tamil Nadu, India, argues that acquiescence is produced in part by a multiscalar broker state that uses several intersecting strategies. These include threatening landowners with coercive eminent domain, facilitating market-based land acquisition by rescaled private capital that operates through a locally embedded network of brokers who persuade landowners, and utilizing the gains from brokerage to finance a populist welfare state that cushions the adverse impacts of dispossession. The use of customized market-based compensation further individualizes the experience of dispossession in an urbanizing context with no living memories of prior collective mobilization against dispossession. The multiscalar state thus intersects with rescaled capital in and through coercive, persuasive, and selected welfare strategies variously employed at the subnational and local scales to blunt resistance and produce acquiescence in the face of dispossession. Examining the decade long process of land acquisition in the MWC SEZ helps us theorize an evolving broker state and understand why it remains largely uncontested in contemporary rent-driven development.

Beauty Contests, Market-Based Compensation, and Reporting Quality

Market-based incentive pay is widely used in managerial compensation. In this study, we examine how Keynesian beauty contests and higher-order beliefs among investors affect the market-based performance measures used by a firm, as well as (1) the optimal compensation contract between the firm's owner and manager, and (2) the owner's choice of reporting quality. Compared to the benchmark without beauty contests, if the investors' decisions are strategic complements (substitutes), beauty contests in the financial market result in more (less) volatile performance measures used to evaluate the manager and decreased (increased) use of market-based compensation in equilibrium. Contingent on the type of the market, the owner can choose a reporting quality to maximize the firm value. Specifically, the reporting quality chosen by the owner is lower (higher) when the investments are strategic complements (substitutes). Further, since the investors have their source of private information, the owner never chooses the highest level of precision for the firm's accounting reports. However, the owner's choice of reporting quality is indeed socially optimal, as it also serves to minimize the deviation of the market's aggregate investment from the firm's fundamental value and thus reduce the chance of asset bubbles.

‘Grand challenge’ or ‘not an issue’? The discourses on income inequality of compensation managers and consultants

Within the broader debate on the increase of labor income inequality, social concerns have growingly focused on organizational practices. Among these, market-oriented compensation practices, with their extensive pay dispersion, are deemed crucial ‘inequality-generators’. Based on 49 interviews with Italian compensation managers and consultants, this article explores whether, in their talk, these actors align with (or detach from) inequality-increasing compensation practices, and which discourses they employ to justify their posture. By resorting to the discourses on meritocracy and market, the respondents fully supported dispersed market-based compensation structures, thus endorsing a motivation- (rather than legitimacy-) centered approach informed by a shareholder (rather than a stakeholder) perspective. In countering possible criticisms, they advanced two main discursive responses: ‘transparent communication’, i.e. communication intended to convince critics about the benefits of merit-based and market-based pay dispersion; and ‘populism’, i.e. a term used to discredit those critics that question any type of pay dispersion. Assuming a discursive approach, the paper adds an HRM perspective to the growing debate on the role of organizations in producing and re-producing income inequality, while critically showing that compensation managers and consultants fail as a resource for inequality reduction.

Market-Based Executive Compensation Contract under Endogenous Information Acquisition

The study investigates how a publicly traded firm's liquidation value and stock price are used in an executive compensation contract when information acquisition in the asset market is endogenized. If the inside owner offers marketbased compensation contract to the risk-averse manager, the inside owner expects higher utility than when stock prices are excluded from the contract. If information cost displays an intermediate value, changes in the exogenous parameters generate the direct effect and the indirect effect via the information market. Finally, we find that the market-based compensation contract contributes to the increase of social welfare.

The effect of nonrecurring items on goodwill and CEO market-based compensation

PurposeThis paper aims to analyze the association between goodwill defined as difference between market and book value of equity and reports of nonrecurring items, namely, special items, discontinued operations and extraordinary items to suggest information related to restructuring activities measured by these items can link the valuation and incentive roles of accounting. Economic intuition suggests that successful managerial efforts should increase firm value. Yet, the link between the valuation and stewardship roles of earnings has been difficult to verify.Design/methodology/approachThe author first estimates whether nonrecurring items have an incremental ability to explain goodwill, measured as the difference between market and book value of equity, at the industry level and then estimates whether firm-specific accounting bias is associated with the industry-level signals sent by nonrecurring items. The author then analyzes whether these items are associated with the use of chief executive officer (CEO) market-based compensation.FindingsThe author’ results show that information contained in special items increases firm-specific goodwill, indicating that it sends signals to investors about future growth opportunities, while that of discontinued operations reduces goodwill, suggesting that it provides signals about the adjustments of book value. She does not find any significant informational role for extraordinary items. She also finds that the signals sent by special items are negatively associated with the use of CEO market-based compensation, while those relayed by discontinued operations are positively associated with the use of market-based pay.Research limitations/implicationsContrary to prior studies, the results show special items and discontinued operations are both value and incentive relevant. There are two caveats to this analysis. First, owing to the frequent changes in the definition of discontinued operations, the analysis is conducted using data between 1992 and 2003. Second, some might argue that industry-level incremental R2 might not be appropriate for a compensation analysis. However, entities often use industry norms as a benchmark to set CEO compensation. Thus, it is reasonable to think that industry-level signals matter for executive pay.Originality/valueThe author’s findings suggest that compensation committees in firms across industries consider the information contained in special items and discontinued operations, and selectively alter the level of incentives to encourage managerial efforts.

Do CMO Incentives Matter? An Empirical Investigation of CMO Compensation and Its Impact on Firm Performance

Despite growing interest in various facets of the position of chief marketing officer (CMO), there is very little research on CMO compensation. Accordingly, we set out to investigate the determinants of CMO compensation and its effect on firm performance. Employing the lens of agency theory, we hypothesize that the CMO’s marginal productivity will positively impact the amount of total compensation as well as the extent of performance-based compensation in the CMO’s compensation contract. Moreover, we hypothesize that deviations in contracting elements from predicted levels will adversely impact firm performance. Analyzing a sample of 9,230 firm-year observations over the period 1992–2013, we find that CMOs employed at firms with high advertising and R&D intensity, and operating in competitive product markets, command larger amounts of total compensation. Moreover, a greater proportion of their compensation is market based, with heightened sensitivity to movements in the firm’s stock price. We also find that deviations in CMO compensation elements have an adverse impact on operating performance (return on assets (ROA)), earnings surprises, and stock returns. Specifically, a 10% deviation in market-based compensation from predicted levels reduces ROA by 0.28%, dampens earnings surprises by 0.19%, and degrades annualized stock returns by 2.4%. This paper was accepted by Eric Anderson, marketing.

Studies on land utilization for rural and urban stakeholders: A case study

This study attempts to understand the utilization of land for Development from the perspective of the stakeholder. A balanced economic development embracing rural or agriculture on one hand and urban or industrial growth on the other side, is indispensable for emerging economies like India. The present research is a study of the diverse objectives and how they can be attempted, with a least possible resistance or friction, through a medium of consultative approach. The results have been derived through a survey of stakeholders, covering land owners and other stakeholders through a case study of Greater Mohali Region of Punjab, primarily an agrarian state. The paper tries to throw light on recent evolving land legislatures and compare it with stakeholders options, preferences and incentives needed to facilitate land utilization for development. The results showed that stakeholders are less averse to spare land for certain key sectors like transport, social infrastructure like health and education. Not only this, the acceptance is more if the methodology is packaged through smooth processes, the approach is sensitive and incentivized with marketbased compensation.

Do CMO Incentives Matter? An Empirical Investigation of CMO Compensation and its Impact on Firm Performance

Despite growing interest in various facets of the Chief Marketing Officer (CMO) position, there is very little research on CMO compensation. Accordingly, we set out to investigate the determinants of CMO compensation and its effect on firm performance. Employing the lens of agency theory, we hypothesize that the CMO’s marginal productivity will positively impact the amount of total compensation as well as the extent of performance-based compensation in the CMO’s compensation contract. Moreover, we hypothesize that deviations in contracting elements from predicted levels will adversely impact firm performance. Analyzing a sample of 9,230 firm-year observations over the period 1992-2013, we find that CMOs employed at firms with high advertising and R&D intensity, and operating in competitive product markets, command larger amounts of total compensation. Moreover, a greater proportion of their compensation is market-based, with heightened sensitivity to movements in the firm’s stock price. We also find that deviations in CMO compensation elements have an adverse impact on operating performance (ROA), earnings surprises, and stock returns. Specifically, a 10% deviation in market-based compensation from predicted levels reduces ROA by 0.28%, dampens earnings surprises by 0.19%, and degrades annualized stock returns by 2.4%.

The Signaling Value of Nonrecurring Items and CEO Market-Based Compensation

Nonrecurring items are often characterized as transitory and are assumed to be irrelevant for firm valuation. However, I find that industry-level measures of the informativeness of special items and discontinued operations help to revise market assessments of firm value, and these signals are also systematically associated with CEO market-based compensation. The results suggest that discontinued operations provide clear signals about the business environment in the sector and reduce goodwill, while special items send noisy signals about future performance and increase goodwill. I also find a significant positive (negative) link between CEO market-based compensation and the signals sent by discontinued operations (special items). My results suggest that compensation committees in firms across an industry consider the information contained in these nonrecurring items, and selectively alter the level of incentives pay to encourage managerial efforts.

The Role of Transitory Earnings for Managerial Effort Allocation to Intangibles

There is a concern about the ability of earnings to adequately reflect managerial efforts to intangible-based activities. Agency theory suggests that when core earnings relay little information about managerial effort to certain activities, effort allocation will be insufficient. Risk averse managers consider costs of investing in RD they can send signals about the future and security prices reflect information about them. This means that even though the accounting system creates weak value relevant core earnings concerning intangibles, if transitory earnings can provide some additional information, they can play a vital incentive role. For example, unsuccessful prior intangible investments or obsolete inventory would be reported as transitory earnings (e.g., disposal of a poorly performing line of operation, asset write-downs, inventory write-offs), which can send signals to markets about managerial effort to tackle problems. These can be useful to convey information about managerial efforts exerted on intangibles. I show that under these conditions, market-based compensation helps to mitigate inefficient effort allocation to intangible-based activities. However, the reflection of transitory earnings in market-based compensation can also encourage earnings management. Managers may allocate their effort to a nonproductive activity such as shifting operating expenses to non-operation expenses to avoid a sharp decline in security price or/and meet analyst forecasts. Such activities do not increase economic value. Thus, the ability of transitory earnings to produce proper managerial effort allocation has to be weighed against the possibility of encouraging earnings manipulation.