Pay Without Performance: Overview of the Issues

In their recent book, Pay Without Performance: The Unfulfilled Promise of Executive Compensation , the authors of this article provided a comprehensive critique of U.S. executive pay practices and the corporate governance processes that produce them, and then offered a number of proposals for improving both pay and governance. This article presents an overview of their analysis and proposals.
The authors' analysis suggests that the pay-setting process in U.S. public companies has strayed far from the economist's model of "arm's-length contracting" between executives and boards in a competitive labor market. In place of this conventional model, which is standard in corporate law as well as economics, the authors argue that managerial power and influence play a major role in shaping executive pay, and in ways that end up imposing significant costs on investors and the economy.
The main concern is not the levels of executive pay, but rather the distortion of incentives caused by compensation practices that fail to tie pay to performance and to limit executives' ability to sell their shares. Also troubling are "the correlation between power and pay, the systematic use of compensation practices that obscure the amount and performance insensitivity of pay, and the showering of gratuitous benefits on departing executives."
To address these problems, the authors propose three kinds of changes:

• 1)

  increases in transparency , accomplished in part by new SEC rules requiring annual corporate disclosure that provides "the dollar value of all forms of compensation" (including "stealth compensation" in the form of pensions and other post-retirement benefits) and an analysis of the relationship between the past year's pay and performance, as well as more timely and informative disclosure of insider stock purchases and sales;

       

Consumer susceptibility to interpersonal influence and attributional sensitivity

This research examines the relationship between consumer susceptibility to interpersonal influence and attributional sensitivity. It is hypothesized that consumer susceptibility to interpersonal influence is moderated by the level of attributional sensitivity. Across two studies, this hypothesis was supported. Individuals high in attributional sensitivity scored higher on various measures of consumer susceptibility to interpersonal influence than individuals low in attributional sensitivity. This suggests that consumers susceptible to the influence of others are more likely to purchase products that they perceive will lead others to make favorable attributions about them, and avoid purchasing products that they perceive will lead others to evaluate them negatively. © 1992 John Wiley & Sons, Inc.     

Cost-effectiveness of aripiprazole once-monthly compared with paliperidone palmitate once-monthly injectable for the treatment of schizophrenia in the United States

Objective:

To develop a decision-analytic model to estimate the cost-effectiveness of initiating maintenance treatment with aripiprazole once-monthly (AOM) vs paliperidone long-acting injectable (PLAI) once-monthly among patients with schizophrenia in the US.

Methods:

A decision-analytic model was developed to evaluate a hypothetical cohort of patients initiating maintenance treatment with AOM or PLAI. Rates of relapse, adverse events (AEs), and direct medical costs were estimated for 1 year. Patients either remained on initial treatment or discontinued treatment due to lack of efficacy, AEs, or other reasons, including non-adherence. Data from placebo-controlled pivotal trials and product prescribing information (PI) were used to estimate treatment efficacy and AEs. Analyses were performed assuming dosing of clinical trials, real-world practice, PIs, and highest therapeutic dose available, because of variation in practice settings. The main outcome of interest was incremental cost per schizophrenia hospitalization averted with AOM vs PLAI.

Results:

Based on placebo-controlled pivotal trials’ dosing, AOM improved clinical outcomes by reducing schizophrenia relapses vs PLAI (0.181 vs 0.277 per person per year [pppy]) at an additional cost of US$1276 pppy, resulting in an incremental cost-effectiveness ratio (ICER) of US$13,280/relapse averted. When PI dosing was assumed, this ICER increased to US$19,968/relapse averted. When real-world dosing and highest available dosing were assumed, AOM was associated with fewer relapses and lower overall treatment costs vs PLAI.

Conclusions:

AOM consistently provided favorable clinical benefits. Under various dosing scenarios, AOM results indicated fewer relapses at lower overall costs or a reasonable cost-effectiveness threshold (i.e., less than the cost of a hospitalization relapse) vs PLAI. Given the heterogeneous nature of schizophrenia and variability in treatment response, health plans may consider open access for treatments like AOM. Since model inputs were based on data from separate placebo-controlled trials, generalization of results to the real-world setting is limited.     

Cost effectiveness of a 92-gene assay for the diagnosis of metastatic cancer

Objectives:

To estimate the clinical and economic trade-offs involved in using a molecular assay (92-gene assay, CancerTYPE ID) to aid in identifying the primary site of difficult-to-diagnose metastatic cancers and to explore whether the 92-gene assay can be used to standardize the diagnostic process and costs for clinicians, patients, and payers.

Methods:

Four decision-analytic models were developed to project the lifetime clinical and economic impact of incorporating the 92-gene assay compared with standard care alone. For each model, total and incremental costs, life-years, quality-adjusted life-years (QALYs), incremental cost–effectiveness ratios (ICERs), and the proportion of patients treated correctly versus incorrectly were projected from the payer perspective. Model inputs were based on published literature, analyses of SEER (Surveillance Epidemiology and End Results) data, publicly available data, and interviews with clinical experts.

Results:

In all four models, the 92-gene assay increased the proportion of patients treated correctly, decreased the proportion of patients treated with empiric therapy, and increased quality-adjusted survival. In the primary model, the ICER was $50,273/QALY; thus, the 92-gene assay is therefore cost effective when considering a societal willingness-to-pay threshold of $100,000/QALY. These findings were robust across sensitivity analyses.

Conclusions:

Use of the 92-gene assay for diagnosing metastatic tumors of uncertain origin is associated with reduced misdiagnoses, increased survival, and improved quality of life. Incorporating the assay into current practice is a cost-effective approach to standardizing diagnostic methods while improving patient care. Limitations of this analysis are the lack of data availability and resulting modeling simplifications, although sensitivity analyses showed these to not be key drivers of results.     

自然资源的民主分权:民众参与的制度化

自然资源在当地民众的生计中具有决定性的作用,他们理应参与当地自然资源的管理和决策。分权改变了当地自然资源管理的制度框架,而民主分权是分权的最有效形式。概述了全球自然资源分权改革的实施情况,并对改革效果进行了评价。认为建立民主的地方机构将成为民主分权的主要机制,而责任、自行决定权和安全性是民主分权的3个基本问题,分权过程中中央政府需要有效的分权配套办法,并发挥重要作用。     

Herding and the shifting determinants of exchange rate regime choice

It is difficult to pin down the factors that determine states’ choice of exchange rate regime because those very factors present a moving target. Many scholars have taken on the same question: what are the determinants of exchange rate regime choice? But as a group they have been unable to identify a stable answer. The reason for this is that the factors that best predict exchange rate regime vary dramatically across time. An explanation for this variation is offered: rational herding, or information cascades, can explain why one factor becomes prominent for a period of time then suddenly drops off and is replaced by a better predictor.     

Weekly Variation in Audience Delivery of TV Advertising Schedules

Individual TV advertising spots may vary as much as five rating points from one week to the next which implies that summary measures of audience delivery of TV advertising schedules composed of multiple spots could vary quite drastically. Obviously this would have a marked effect of cost per thousand calculations which is a common criterion for choosing between alternate TV advertising schedules. Based upon examination on a large number of TV advertising schedules, however, this study reports that weekly changes in audience ratings of individual spots comprising an advertising schedule tend to cancel out so that total schedule audience delivery and cost per thousand estimates are not greatly affected over a two week period.     

An environmentally enlightened accounting

Environmental stewardship must become a primary concern if management is to adequately fulfil its societal responsibilities. Management and accounting information systems must aggressively respond to these emerging requirements in order to support adequately the associated information needs as well as to design organizational systems that motivate and facilitate desired behavior. Our purpose here is to consider a framework useful for developing environmentally enlightening management and accounting information systems that take into account alternative environmental perspectives. The framework can be used to develop prototypes representing different levels of environmental enlightenment, and as such, can provide general guidance for moving collectives and organizations toward a more environmentally responsible posture. The framework is illustrated using an example from the salmon farming industry provided in [Geogakopoulous, G., & Thomson, I., 2004. Organic salmon farming: Risk perceptions, decision heuristics and the absence of environmental accounting. In Proceedings of the Asia Pacific Interdisciplinary Research in Accounting. Singapore, July 4–7, 2004, this paper has since been published in this edition of Accounting Forum].     

Ethical Audit Decisions: A Structuration Perspective

The public accounting profession has long relied on its reputation for integrity and veracity as justification for its professional status and monopoly privilege predicated on claims of acting in the public interest. If such status and privilege are to be justified and sustained, serious consideration of what constitutes ethical behavior, how such behavior is motivated as well as an explicit recognition of the rights and interests of affected parties constitutes an ethical imperative for the profession. Traditionally, work on ethics and auditing is quite narrow, failing to recognize the social context of individual actions, failing to identify the relevant constituencies of the profession, and failing to articulate processes through which the constituencies interests can be identified. Generally, the accounting literature has taken a cognitive perspective on ethical decision making which views the resolution of ethical dilemmas as primarily a function of the moral makeup of the actor responding within the context of the Code of Professional Conduct. The purpose of this paper is to broaden the theoretical base of ethical research, specifically within the area of professional accounting and more generally in the area of business. We propose the application of structuration theory in conjunction with stakeholder theory and a responsibility ethic. The application of stakeholder theory is a means for identifying affected constituencies. A responsibility ethic recognizes the situatedness of an individual within an ongoing professional community. Structuration theory provides a theoretical framework for articulating and investigating both the structures within which action is carried out as well as the interaction between the social structures and the actors. Taken together, the theories allow for an enhanced ability to define ethical behavior within a business context and to understand the contextual antecedents and consequences of ethical acts.