Stock-based incentive contracts and managerial performance: the case of Ralston Purina Company

Article Abstract:

Stock-based incentives do not guarantee that the interests of both managers and shareholders will be served based on a study of such an incentive plan adopted by Ralston Purina Co in 1986. The Ralston plan was structured in a way that the payoffs were not linked to value creation by the managers. As a result, the 14 Ralston managers collected their payoffs only within five years, while shareholder value lost $2.1 billion in industry-adjusted terms.

Prepared Feeds, Other Animal Food Manufacturing, Prepared feeds, not elsewhere classified, Research, Agricultural industry, Compensation and benefits, Employee incentives, Executives, Animal feeding and feeds, Employee stock ownership plans, Ralston Purina Co., RAL

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The complexity of compensation contracts

Article Abstract:

The cross-sectional proof on remuneration contracting shows that the power of the board of directors to give equity can be anticipated by the combination of physical and non-physical assets in the company, and to a lesser degree, by company size and founding family involvement in management. Innovative companies are more inclined to employ a broader array of equity-based awards.

Planning, Compensation management, Incentives (Business)

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Measuring security price performance using daily NASDAQ returns

Article Abstract:

Variance estimation and other problems due to the differences in the NASDAQ system, compared to the New York and American Stock Exchanges, require alternative test statistics to be used in event studies. A study involving 250 samples including a varying number of securities showed best performance was obtained using the nonparametric risk statistic of Corrado.

Prices and rates, Stock-exchange, Stock exchanges, Statistics, Securities, Securities prices, NASDAQ Market System

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