The Project Report In Executives Salaries Commerce Essay

The Project Report In Executives Salaries Commerce Essay Are CEOs overpaid? Many people think so and many potential causes have been identified such as too much power, inattentive boards of directors, conflicts of interest by compensation consultants, the use of stock options and the list goes on. Some studies show that the average CEO was paid $10 million to $15 million in 2005. This includes their salary, bonus, stock option gains, stock grants and various executive benefits and prerequisites (news.cnet.com). We now look at the highest 10 paid jobs in UK and find not surprisingly that Company CEOs are right there at the top of the list by a huge pay difference when compared with others high in the list. 10 Highest paid UK jobs June 2009 Company CEO/Directors  £171,509 Doctors  £81,744 Brokers  £80,233 Financial Managers Chartered Secretaries  £79,545 Civil Servants (Senior)  £71,824 Aircraft Pilots Flight Engineers  £61,585 Management Consultants/Economists  £52,505 Lawyers, Judges Coroners  £51,579 Police Officers (Inspector and above)  £51,487 Managers (Marketing and Sales)  £50,575 ( Source : careerbuilder.co.uk ) Research Question What factors affect chief executive officer salaries? The files CEOSAL1.RAW and CEOSAL2.RAW are data sets that have various firm performance measures as well as information such as tenure and education. Compared with CEOSAL1.RAW, the second data set contains more information about the CEO, rather than about the company is included (Wooldridge, 2008). In the dataset, Wooldridge took a random sample of data reported in the May 6, 1991 issue of Businessweek. Literature Review In context of current financial crisis, CEO compensation has been a major subject of discussion among businessmen and academics since early 1920s (McKnight et al., 2000). How high should be the compensation, what is the relationship between CEO pay and his abilities, what is the correlation between CEO compensation and companys performance? We have chosen the topic due to its obvious relevance with current financial situation. During the literature review we found a number of empirical articles, exploring various aspects of CEO compensation. McKnight et al (2000) in CEO age and Top Executive Pay: A UK Empirical Study examines the implication of CEO age on managerial pay. They promote four hypotheses: The positive relationship between CEO pay and age The positive relationship between company size and CEO compensation, however it would weaken with the increase of CEO age The relationship between company performance and CEO salary would weaken with increasing age of CEO The relationship between company performance and CEO incentive pay would be positive and would strengthen with increase of CEO age They have explored over 100 UK companies and not only considered CEO pay but have divided it into salary, performance bonuses and share options in order to obtain clearer results. McKnight et al (2000) have concluded that relationship between CEO age and their bonuses appeared to be non-linear. The data did not support Hypothesis 3 and 4, although Hypothesis 1 and 2 were proved by the data. The practical implication of their research suggests that board members considering CEO pay should take into account the age, family and financial circumstances of the CEO, especially if CEO age is about 53 years, as it is an inflection point on curvilinear association of the effect of CEO age on bonus. This conclusion highlights the different aspect of CEO pay, whereas in earlier research McKnight (1996) examined 200 UK firms and found that performance and firm size are the important predictors of executive remuneration. Rose and Shepard (1997) in Firm diversification and CEO compensation: managerial ability or executive entrenchment? explored empirical association between CEO pay and a number of different firm characteristics, such as size and performance. They have also considered CEO personal abilities and characteristics, however the major focus of their research was on correlation between CEO pay and company diversification. They conclude that firm diversification in most cases does not benefit stockholders by increasing company value, but might only benefit the decision makers. Rose and Shepard (1997) admit that such conclusion is controversial and required further empirical research. Rose and Shepard (1997) considered firm diversification as one important determinant of CEO compensation. Investigating the relationship between CEO compensation and firm diversification over 1985-1990, they found that the CEO of a firm with two lines of business averages 13% more in salary and bonus than the CEO of a similar-sized but undiversified firm, ceteris paribus. The term Ceteris Paribus means that all other relevant factors held fixed or constant (Morris, 2008). In the later paper of Van Putten and Bout (2008), the relationship between CEO compensation and company performance has been stressed and their research was made during financial crisis and therefore might be more relevant in todays economic situation. Deckop (1988) analyse data from 120 firms in 1977-81 to show that CEOs were not given an incentive through compensation to increase the size of the firm at the expense of profit which is contrary to the findings of some other studies. Rather, CEO compensation was positively related to profit as a percentage of sales. The market equity value of the firm and the CEOs age and years of service as a CEO had a little effect on compensation (Deckop, 1988). Wright, Kroll and Elenkov (2002) provide us with a theoretical argument that the effect of acquisition-related factors on CEO compensation is contingent upon the intensity of monitoring activities. In firms with vigilant monitors, returns will explain changes in CEO compensation while in firms with passive monitors, increased corporate size due to an acquisition will explain compensation changes. They found support for their hypothesis in a sample of 171 acquisitions over the 1993-98 time period. Various researchers have come up to different conclusions exploring factors affecting CEO pay, therefore we have found this question interesting and we would consider the data from Cengage database and look for some other factors, affecting CEO compensation. Data Description The data has been downloaded from CEngage Learning which has online data sets for Wooldridges Introductory Econometrics: A Modern Approach (cengage.com). It contains two data sets namely CEOSAL1.RAW and CEOSAL2.RAW. CEOSAL2.RAW, the second data set contains more information about the CEO, rather than about the company as in case of CEOSAL1.RAW. The Table below describes the variables in the data sets CEOSAL1 and CEOSAL2. These two data sets were merged to give one final data set namely CEOSAL3.DTA. The variable description for the final data set CEOSAL3 can be found in the Appendix. Variable Descriptions for CEOSAL1 Salary Annual salary (including bonuses) in 1990 (in thousands) $ Sales Firm sales in 1990 (in millions) $ Roe Average return on equity, 1988-90 (in percent) Pcsal Percentage change in salary, 1988-90 Pcroe Percentage change in roe, 1988-90 Indust = 1 if an industrial company, 0 otherwise Finance = 1 if a financial company, 0 otherwise Consprod = 1 if a consumer products company, 0 otherwise Util = 1 if a utility company, 0 otherwise Ros Return on firms stocks 1988-90 Lsalary Natural log of salary Lsales Natural log of sales Variable Descriptions for CEOSAL2 Salary Annual salary (including bonuses) in 1990 (in thousands) $ Age Age in Years College = 1 if attended college, 0 otherwise Grad = 1 if attended graduate school, 0 otherwise Comten Years with Company Ceoten Years as CEO with Company Sales Firm sales in 1990 (in millions) $ Profits Firm Profits in 1990 (in millions) $ Mktval Market Value (in millions) $, end 1990 Lmktval Natural log of mktval Lsalary Natural log of salary Lsales Natural log of sales Comtensq comten^2 (company tenure squared) Ceotensq ceoten^2 (ceo tenure squared) Profmarg profits as % of sales Data Analysis We used regression analysis to look out the factors that affect chief executive officer salaries. We chose a multivariate model because most variables cannot be explained by a single variable and estimations based on a single explanatory variable may lead to biased coefficients (Baum, 2006). A multivariate model allows for ceteris paribus analysis and we can avoid the missing variable bias. We used Stata 10 for the regression analysis of the data set. The data sets namely CEOSAL1.DTA and CEOSAL2.DTA were combined to get a single data set CEOSAL3.DTA. The merging of data sets was possible because the variable salary and sales were common to both data sets and this was necessary to come up with a single equation. The data set CEOSAL1.DTA in memory was appended with CEOSAL2.DTA on disk using the append datasets option in Stata 10 by clicking on Data tab and selecting combine datasets option. Econometric Methodology The methodology is econometric as statistical tool (Stata 10) was used to address economic issues. The analysis is based on observational (non-experimental) data. We then derive a relationship from economic theory or come up with an equation that serves us as an econometric model. lsalary = 4.78 (.51) + .191 (.04) lsales + .083 (.06) lmktval + .017 (.005) ceoten .094 (.079) grad .065 (.23) college .01 (.003) comten + I + u where lsalary = dependent variable, regressand; lsales / lmktval / ceoten / grad / college / comten = explanatory variables, regressor ; u = error term / disturbance; I = dummy / dichotomous variable for Industry ; 4.78 = intercept parameter, .19 / .08 / .017 / -.09 / -.06 / -.01 = population / slope parameters and the respective standard errors are shown in brackets and the bold variables represent that the variable is statistically significant in the data. In the above equation as the dependent variable is also in natural logarithm, the natural log of the explanatory variable gives us elasticity. Elasticity is the percentage change in one variable given a 1% ceteris paribus increase in another variable (Wooldridge, 2008). So, the coefficients of lsales and lmktval give us the elasticity i.e the percentage increase in the dependent variable when the explanatory variable is increased by 1% ceteris paribus. For example, a 1% unit increase in lsales will account for approximately 19% increase in lsalary and similarly a 1% unit increase in lmktval will account for approximately 8% increase in lsalary. Interpretation The t-statistic or t-ratio is defined as the coefficient of the variable divided by its standard error (Wooldridge, 2008). If the numerical value of t-statistic or t-ratio is greater than 2 i.e |t| >2, then the variable is statistically significant. In the data after running the regression analysis, we find the t-ratio of lsales, ceoten, comten and the constant ( y intercept parameter) to satisfy the above inequality [ |t| >2 ] and hence these variables can be declared as statistically significant. The R square for the model is 0.355 ( approximately 36% ) which is moderate as a high R square does not necessarily imply a better model as the coefficient can be misleading at times. However, it is a good starting point and generally bigger R square is good. We get the constant ( y intercept ) to be statistically significant as this would allows us to make an idea of the basic salary of CEO even when sales, profits and market value is down because the CEO gets paid his basic salary, rega rdless of the firm making profits or losses. Critical Analysis With reference to our group presentation and the video reported by ABC News, NewYork which showed that CEOs average annual bailout is $ 13.7 million and average wage earner earns $ 31, 589. This is almost 436 times the salary of an average wage earner which seems to raise few questions and a debate over whether CEOs are overpaid ( youtube.com ). This then raises the point that no survey of executive compensation is complete without the discussion of political factors influencing the great level of CEO pay. The controversy heightened with the November 1991 introduction of Graef Crystals (1991) expose on CEO pay, In Search of Excess, and exploded following President George Bushs ill-timed pilgrimage to Japan in January 1992, accompanied by an entourage of highly paid US executives (Murphy, 1999). Conclusion The research aimed to find out the factors that affect chief executive officer salaries and why CEOs are compensated greatly. The data sets namely CEOSAL1.DTA and CEOSAL2.DTA were combined to give a final data set that was used to answer the research question and draw the conclusion that sales, market value ceotenure have a positive effect on CEO salary while company tenure and college / graduation have a negative effect. In our research and data analysis, the most significant factor comes out to be sales. Limitations The data Wooldridge took is from an issue of Busineesweek in 1991 which is quite old. The files need to be updated and it could be very interesting to know the current trend in CEO Compensation and whether the current economic recession had any effects. Due to the current prevalent economic crisis, the findings can be really interesting which could further add some value to the research that has been already done and leave some space for more research to be carried out in this particular topic. An interesting comparison could be made between the factors e.g sales, ros (return on stocks), roe (return on equity), CEOs age, CEO tenure, profits, market value, comten (years with company), etc highlighted in our literature review and our results so that we know which factor plays the most important role and consequently affects chief executive officer salaries when contrasted in relative terms with other studies. The sample size in the data is approximately 200 observations which is not gr eat. The data shows no evidence for the location of firms and the gender of the CEO. It would be a more contemporary question to pose that is there any gender discrimination in CEO Compensation. The policies of the government are also unknown to see if there were any tax evasions present or not. Further Research A further deep research could use the current data to find the factors affecting CEO salaries. Then, the effects of current economic recession could be looked into and a further study could try to find whether CEOs are overpaid and if so what are the reasons for it? Is it truly because of their managerial ability or it is just an executive entrenchment? Then one could also look at the role of monitoring CEOs and their firms. Are these small, medium or family operated firms and what factors affect their growth and output? Is there sex discrimination in CEO compensation? Bibliography Baum, C.F (2006), An Introduction to Modern Econometrics Using Stata, Stata Press Bout, A. and Van, P.S. (2008), Beyond the boardroom: considering CEO pay in a broader context, People Strategy Deckop, J.R (1988), Determinants of Chief Executive Officer Compensation, Industrial and Labor Relations Review, 41(2), pp. 215-226 Crystal, G. (1991), In Search of Excess: The Overcompensation of American Executives, W.W. Norton Company: New York McKnight, P. (1998), An Explanation of Top Executive Pay: A UK Study, British Journal of Industrial Relations, 34:4 McKnight P., Tomkins C. and Weir C. (2000), CEO Age and Top Executive Pay: A UK Empirical study, Journal of Management and Governance, 4:2000 Morris, C. (2008), Quantitative Approaches in Business Studies, 7th Edition, FT-PrenticeHall Murphy, K. (1999), Executive Compensation, Handbook of Labour Economics, 3(2), pp. 2485-2563 Rose, N.L and Shepard, A. (1997), Firm diversification and CEO compensation: managerial ability or executive entrenchment, Journal of Economics, 28(3), pp. 489-514 Wooldridge, J.M (2008), Introductory Econometrics: A Modern Approach, 4th Edition, South-Western Wright, P. ,Kroll M. And Elenkov,D. (2002), Acquisition Returns, Increase in Firm Size, and Chief Executive Officer Compensation: The Moderating Role of Monitoring, The Academy of Management Journal, 45(3), pp. 599-608 http://login.cengage.com/sso/logouthome.do (Accessed on 10th February, 2010) http://news.cnet.com/The-great-overpaid-CEO-debate/2010-1014_3-6078739.html (Accessed on 1st March, 2010) http://www.careerbuilder.co.uk/Article/CB-27-Job-Search-Britains-Best-Paid-Jobs/ (Accessed on 1st March, 2010) http://www.youtube.com/watch?v=vcG-_LlKN14 (Accessed on 19th March, 2010)

The Return: Midnight Chapter 37

Then Meredith saw something that was not smoke or fire. Just a glimpse of a door frame – and a tiny breath of cool air. With this hope to sustain her, she scuttled straight for the door to the backyard, dragging Isobel behind her. As she passed the threshold, she felt blessedly cold water somehow showering down onto her body. When she pul ed Isobel into the spray, the younger girl made the first voluntary sound she had during the entire journey: a wordless sob of thanks. Matt's hands were helping her along, were taking away the burden of Isobel. Meredith got up to her feet and staggered in a circle, then dropped to her knees. Her hair was on fire! She was just recal ing her childhood rehearsal of stop, drop, and rol , when she felt the cold water turned on it. The hose water went up and down her body and she turned around, basking in the feeling of coolness, until she heard Matt's voice say, â€Å"The flames are out. You're good now.† â€Å"Thank you, Matt. Thank you.†Her voice was hoarse. â€Å"Hey, you were the one who had to go al the way to the bedrooms and back. Getting Mrs. Saitou out was pretty easy – there was the kitchen sink ful of water, so as soon as I cut her free from the kitchen chair we just got al wet and dashed outside.† Meredith smiled and looked around quickly. Isobel had become her responsibility now. To her relief, she saw that the girl was being hugged by her mother. And al it had taken was the nonsense choice between a thing – however precious it was – and a life. Meredith gazed at the mother and daughter and was glad. She could have another stave made. But nothing could replace Isobel. â€Å"Isobel said to give this to you,†Matt was saying. Meredith turned toward him, the fiery light making the world crazy, and for one moment didn't believe her eyes. Matt was holding the fighting stave out to her. â€Å"She must have dragged it with her free hand – oh, Matt, and she was almost dead before we started†¦Ã¢â‚¬  Matt said, â€Å"She's stubborn. Like someone else I know.† Meredith wasn't quite sure what he meant by that, but she knew one thing. â€Å"We'd al better get to the front yard. I doubt the volunteer fire department is going to come. Besides – Theo – â€Å" â€Å"I'l get them moving. You scout the gate side,†Matt said. Meredith plunged into the backyard, which was hideously il uminated by the house, now ful y engulfed in flames. Fortunately, the side yard was not. Meredith flicked the gate open with the stave. Matt was right behind her, helping Mrs. Saitou and Isobel along. Meredith quickly ran by the flaming garage and then stopped. From behind her she heard a cry of horror. There was no time to try to soothe whoever had cried, no time to think. The two fighting women were too busy to notice her – and Theo was in need of help. Inari was truly like a fiery Medusa, with her hair writhing around her in flaming, smoking snakes. Only the crimson part burned, and it was that part that she was using like a whip, using one snake to wrest away the silver bul whip from Theo's hand, and then another to wrap around Theo's throat and choke her. Theo was desperately trying to pul the blazing noose from her neck. Inari was laughing. â€Å"Are you suffering, petty witch? It wil al be over in seconds – for you and for your entire little town! The Last Midnight has final y come!† Meredith glanced back at Matt – and that was al it took. He ran forward, passing her, al the way up to the space below the fighting women. Then he bent slightly, cupping his hands. And then Meredith sprinted, putting everything she had left into the short run, leaving her just enough energy to leap and place one foot into Matt's cupped hands, and then she felt herself soaring aloft, just within distance for the stave to slice cleanly through the snake of hair that was choking Theo. After that Meredith was in free fal , with Matt trying to catch her from below. She landed more or less on top of him and they both saw what happened next. Theo, who was bruised and bleeding, slapped out a part of her gown that was smoldering. She held out a hand for the silver bul whip and it flew to meet her outstretched fingers. But Inari wasn't attacking. She was waving her arms wildly, as if in terror, and then suddenly she shrieked: a sound so anguished that Meredith drew in her breath sharply. It was a death-scream. Before their eyes she was turning back into Obaasan, into the shrunken, helpless, dol -like woman Matt and Meredith knew. But by the time this shriveled body hit the ground it was already stiff and dead, her expression one of such unrepentant malice that it was frightening. It was Isobel and Mrs. Saitou then who came forward to stand over the body, sobbing with relief. Meredith looked at them and then up at Theo, who slowly floated to the ground. â€Å"Thank you,†Theo said with the faintest of smiles. â€Å"You have saved me – yet again.† â€Å"But what do you think happened to her?†Matt asked. â€Å"And why didn't Shinichi or Misao come to help her?† â€Å"I think they al must be dead, don't you?†Theo's voice was soft over the roar of the flames. â€Å"As for Inari – I think that perhaps someone destroyed her star bal . I'm afraid I was not strong enough to defeat her myself.† â€Å"What time is it?†Meredith abruptly cried, remembering. She ran to the old SUV, which was Stillrunning. Its clock showed 12:00 midnight exactly. â€Å"Did we save the people?†Matt asked desperately. Theo turned her face outward toward the center of the town. For nearly a minute she was Still, as if listening for something. At last, when Meredith felt that she might shatter from tension, she turned back and said quietly, â€Å"Dear Ma ma, Grand mama, and I are one, now. I sense children who are finding themselves holding knives – and some with guns. I sense them standing in their sleeping parents'rooms, unable to remember how they got there. And I sense parents, hiding in closets, a moment ago frightened for their very lives, who are seeing weapons dropped and children fal ing onto master bedroom floors, sobbing and bewildered.† â€Å"We did it, then. You did it. You held her off,†Matt panted. Stillgentle and sober, Theo said, â€Å"Someone else – far away – did much more. I know that the town needs healing. But Grand mama and Ma ma agree. Because of them, no child has kil ed a parent this night, and no parent has kil ed a child. The long nightmare of Inari and her Last Midnight is over.† Meredith, grimy and bedraggled as she was, felt something rise and swell inside her, bigger and bigger, until, for al her training, she couldn't contain herself any longer. It exploded out of her in a yel of exultation. She found that Matt was shouting too. He was as grubby and unkempt as she was, but he seized her by the hands and whirled her around in a barbarian victory dance. And it was fun, whirling around and yel ing like a kid. Maybe – maybe in trying to be calm, in always being the most grown-up, she had missed out on the essence of fun, which always felt as if it had some childlike quality to it. Matt had no trouble in expressing his feelings, whatever they were: childlike, mature, stubborn, happy. Meredith found herself admiring this, and also thinking that it had been a long time since she'd real y looked at Matt. But now she felt a sudden wave of feeling for him. And she could see that Matt felt the same way about her. As if he'd never real y looked at her properly before. This was the moment†¦when they were meant to kiss. Meredith had seen it so often in movies, and read about it in books, that it was almost a given. But this was life, it wasn't a story. And when the moment came, Meredith found herself holding Matt's shoulders while he held hers, and she could see that he was thinking exactly the same thing about the kiss. The moment stretched†¦ Then, with a grin, Matt's face showed that he knew what to do. Meredith did too. They both moved in, and hugged each other. When they drew back, they were both grinning. They knew who they were. They were very different, very close friends. Meredith hoped that they always would be. They both turned to look at Theo, and Meredith felt a pang in her heart, the first since she had heard they'd saved the town. Theo was changing. It was the look on her face as she watched them that gave Meredith the pang. After being young, and while watching youth at its peak, she was once again aging, wrinkling, her hair going white instead of moonlit silver. At last, she was an old woman wearing a raincoat covered with bits of paper. â€Å"Mrs. Flowers!† This person, it was perfectly safe and right to kiss. Meredith flung her arms about the frail old woman, lifting her off her feet in excitement. Matt joined them, and they boosted her above their heads. They carried her like this to the Saitous, mother and daughter, who were watching the fire. There, sobered, they put her down. â€Å"Isobel,†Meredith said. â€Å"God! I'm so sorry – your home†¦Ã¢â‚¬  â€Å"Thank you,†Isobel said in her soft, slurred voice. Then she turned away. Meredith felt chil ed. She was even beginning to regret the celebration, when Mrs. Saitou said, â€Å"Do you know, this is the greatest moment in the history of our family? For hundreds of years, that ancient kitsune – oh, yes, I've always known what she was – has been forcing herself upon innocent humans. And for the last three centuries it has been my family line of samurai mikos that she has terrorized. Now my husband can come home at last.† Meredith looked at her, startled. Mrs. Saitou nodded. â€Å"He tried to defy her and she banished him from the house. Ever since Isobel was born, I have feared for her. And now, please forgive her. She has trouble expressing what she feels.† â€Å"I know about that,†Meredith said quietly. â€Å"I'l go have a little talk with her, if it's All right.† If ever in her life she could explain to a fel ow traveler what fun having fun was, she thought, it was now.

Principal Parts of Irregular Verbs in English (S-W)

In the table below, youll find the principal parts of the most common irregular verbs  in English (from S to W). To find the correct past or past participle form of a verb not included in the list, check your dictionary. If the dictionary gives only the present form of the verb, presume that the verb is regular and forms the past and past participle by adding -d or -ed. Principal Parts of Irregular Verbs S-W PRESENT PAST PAST PARTICIPLE sit sat sat sleep slept slept slide slid slid sling slung slung slit slit slit speak spoke spoken speed sped (or speeded) sped (or speeded) spin spun spun split split split spread spread spread spring sprang (or sprung) sprung stand stood stood steal stole stolen stick stuck stuck sting stung stung stink stank (or stunk) stunk strike struck struck (or stricken) string strung strung swear swore sworn sweep swept swept swell swelled swelled (or swollen) swim swam swum swing swung swung take took taken teach taught taught tear tore torn tell told told think thought thought throw threw thrown thrust thrust thrust wake woke (or waked) woke (or waked or woken) wear wore worn weave wove woven weep wept wept win won won wind wound wound write wrote written Continue with: Irregular Verbs:  Arise  to  GrowIrregular Verbs:  Hang  to  Sink