The Rationale behind CEO Compensation
Studies show that CEOs face a significant risk to their future earnings and employment prospects when taking a job at a company with existing, or potential financial problems. But new research by accounting Professor Steve Hillegeist and co-authors shows that such executives can expect to be compensated, often handsomely, for putting their human capital at risk.
Accounting Detective: Using Forensics to Get the Story Behind the Numbers
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Student Life: School of Accountancy
Student life is a mix of academics, professional development, service and social events. In every issue of KnowACC we will bring you highlights of the student experience and news about their achievements. The students in the School of Accountancy are active and creative, in the classroom and during their free time.
Food for Thought: Cherry-Picked Statistics Fuel Tax-Reform Debate
The Buffett Rule is expected to remain an issue through the November election. Sparked by billionaire Warren Buffett’s contention that he paid a lower percentage of his income in taxes than his secretary, the Buffett Rule would raise marginal tax rates on the very wealthy. Some claim that the top 1 percent already shoulder 41 percent of the nation’s tax burden -- plenty high enough, they say. Is that number for real? “They’re cherry picking,” says accounting Professor Philip Reckers.
Performance Goals for CFOs Returning to Pre-Downturn Norms
During the financial crisis and the resulting recession, companies set tough targets for their CFOs, refusing, in some cases, to give bonuses unless companies reported positive earnings, accounting professor Michal Matejka says. In a time when a lot of firms were reporting losses by no fault of their own, that meant that some CFOs probably didn't receive the sorts of bonuses that they had in the past. But they could breathe easier last year, as the performance goals set for them in their compensation plans got a little easier to achieve, according to Matejka's new research.
Bonus Points: Setting Targets for CFO Compensation in Times of Crisis
The recession has caused all sorts of difficulties for CFOs: falling earnings, tumbling stock prices and, occasionally, knotty negotiations with lenders. For most of them, it has also brought tougher targets for earning their bonuses. Many companies, as part of their CFO bonus plans, adopted earnings targets of zero or just above zero during the recession, according to a study by Michal Matejka, an accounting professor at the W. P. Carey School of Business. Thus a CFO would have received no bonus if his firm reported a loss. An earnings target of zero sounds easy enough. But in a recession it can be difficult to achieve even that. So what is the best way for companies to provide incentives to their financial officers?