BUS 421 Study Guide - Final Guide: Financial Statement

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 421
• Professor: Jamal Nazari

Document Summary

Say on pay: the practice of granting shareholders the right to vote on a company"s executive compensation program at the annual shareholder meeting. Power theory: this theory suggests that executive compensation in practice is driven by manager opportunism, not efficient contracting. Takeover laws: increasing difficulty for firms incorporated in a state to be taken over. The effect of such laws is to decrease an important constraint on manager power and opportunism. Golden parachutes: a component in manager"s compensation contracts granting a substantial severance payment, regardless of the reason for leaving. Restricted stock: perceived as a more efficient compensation device. Cannot be sold during a fixed period or until certain conditions have been met. Results in less flexibility for manager"s to opportunistically time its sale. This should reduce some of the eso abuses, such as pump and dump and late timing.