In the first article of this two-part series on hedging, we discussed two best practices in hedging policy management. In this article – part two of the series – we ask a precursor question: should my firm be hedging? The answer to this question will vary by firm and will depend on the circumstances surrounding the decision to hedge. Answering this question first requires asking a few other questions:Read More Should my Firm Hedge?
Why will disclosing the ratio of CEO pay to the median pay of employees is pointless, costly and has the potential to backfire:
- The ratio does not tell us whether a CEO has been successful at his/her job. The CEO’s contribution is measured by the value the CEO has provided to its shareholder. A CEO Pay/TSR ratio will make more sense
- It will encourage companies to let go of lower paid employees and increase capital investments (at best) or increase outsourcing, potentially to foreign firms to improve the ratio. While under certain circumstances these moves may be seen as positive, they do not serve one of the main purposes of the rule which is to reduce inequality
Ask a chief executive if value is important to him or her, and he or she will likely say yes. Ask if employees are important stakeholders in the enterprise, and the answer will almost certainly be yes. Yet, when it comes to incentive compensation, human resources will choose some type of profit sharing. This has Read More Profit or Value: What should we share?