Sky Blog
In the wake of a judicial decision invalidating Tesla CEO Elon Musk’s stock-option package, Tesla’s shareholders have voted overwhelmingly to ratify Musk’s pay. Rather than respect investors’ judgment, however, the lawyers who brought the case claimed that the shareholder vote …
Class-action litigation for fraud on the market typically focuses on purchasers and sellers of stock. Yet those that traded in options on the shares can also be harmed. In a recent paper, we draw from experience in In re Apple, …
The media often highlights hefty CEO compensation packages featuring lucrative stock grants, restricted shares, and stock options. The rationale for offering such equity-type compensation to top executives is to align the interests of managers and shareholders to mitigate agency conflicts …
In contrast to the volatility that vexed the economy in 2022, markets rose in 2023 as inflation fell and the labor market remained strong. Entering 2024, ongoing international instability, rapidly changing technology and the United States presidential campaign are certain …
In recent years, the gap between the compensation of CEOs and their vice presidents (VPs) has been increasing, especially equity compensation (i.e., stock and stock options). Scholars have proposed several explanations. First, the pay differential may relate to the varying …
The basic goals of executive compensation have changed little since the advent of large corporations in the late 19thcentury: Provide strong incentives to increase shareholder value, retain key talent, and limit shareholder cost. The literature of compensation consultants …
Critics of mandatory public disclosure often argue that it may put disclosing firms at a competitive disadvantage by requiring them to reveal potentially proprietary information to rivals. For instance, when the Financial Accounting Standards Board (FASB) proposed to mandate more …
CEO compensation typically consists of cash and long-term equity. While the benefits of cash are to some extent fixed, the value of equity-based compensation depends on the market value of the firm. The latter is the key mechanism for motivating …
Firms regularly grant stock and stock options to their employees as a way to align the incentives of employees and shareholders. This is particularly relevant for executives, because they routinely make decisions that have an appreciable effect on firm value …
Innovation is the primary engine of growth in economies at the technological frontier, and a path to higher profits and growth for individual companies, as the likes of Apple, Alphabet, Microsoft, and Amazon make clear. CEOs play a crucial role …
Since the financial crisis, much of the business media have focused on the level of CEO compensation and how much it increases from the prior year, often calling out the CEOs with the highest pay. These articles in the New …
The separation of corporate ownership from control leads to an agency problem caused by the divergent interests of shareholders (the principals) and management (the agent). One area of contention is the level of risk-taking by the firm. Managers’ investment in …
Every securities lawyer knows that offers and sales of securities must either be registered under the Securities Act of 1933 (Securities Act) or made pursuant to an applicable exemption. This rule is so fundamental that we often neglect to think …
The Silicon Valley ecosystem has changed profoundly since the dizzying heights of the dot-com era. Consider two of that era’s iconic companies: Yahoo! and eBay. At the time of their IPOs, both of these companies were mere infants by today’s …
Following the issuance of proposed regulations in June 2011, the Internal Revenue Service issued final regulations on March 30, 2015 clarifying certain exceptions to the compensation deduction limitation imposed by Section 162(m) of the Internal Revenue Code. Section 162(m) imposes …