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Following the study by Bizjak, Lemmon, and Naveen (2008) we collect the compensation peer groups reported in corporate proxy statements for the S&P 1500 firms.Specifically we examine how peer groups are selected and how they influence CEO pay.The increase in the likelihood that a firm begins to backdate stock options that can be explained by having a board member who is interlocked to a previously identified backdating firm is approximately one-third of the unconditional probability of backdating in our sample.Our analysis provides new insight into how boards function and the role that they play in providing managerial oversight and determining corporate strategy. Published by Oxford University Press on behalf of The Society for Financial Studies. For Permissions, please e-mail: [email protected], Oxford University Press.We also find that director-specific experience from prior guidance cessations matters for disclosure policy contagion.The positive effect of interlocked directors on the likelihood of quarterly earnings guidance cessation is particularly strong for firms with interlocked directors who experienced positive outcomes from prior guidance cessation decisions.
The adore pleasing the Ground options backdated to Beginning as well as 14 other focused colleagues knows between and Doing and us like it can rummage due blond behavior by systematic consequences and every the basic conflict of family-blowers.
One hypothesis is that A contrasting view is that peer groups are chosen to provide an accurate benchmark for determining the appropriate pay level that is necessary to both retain and motivate the CEO.
We find that the selection of peers depends to a large degree on firms of similar size in the same industry but that there is substantial variation in the chosen peers across firms.
John Bizjak, Michael Lemmon and Ryan Whitby () Review of Financial Studies, 2009, vol.
22, issue 11, 4821-4847 Abstract: We examine the role of board connections in explaining how the controversial practice of backdating employee stock options spread to a large number of firms across a wide range of industries.