TRANSFERABLE STOCK OPTIONS (TSOS) AND THE COMING REVOLUTION IN EQUITY-BASED PAY

The dominant form of equity pay in the U.S. will change dramatically when accounting rules are changed (most likely in 2005) to require companies to charge the cost of their stock option plans on their income statements. Many companies are already switching from stock options to other forms of equity pay, especially restricted stock. The most notable switcher was Microsoft, the world's largest user of stock option pay. In July 2003, partnering with J.P. Morgan, Microsoft created a onetime transferable stock option (TSO) program that allowed holders of underwater Microsoft options to sell their options to J.P. Morgan in return for restricted shares.
But the most important consequence of this transaction may not be a widespread shift by corporate America to restricted shares, but rather the creation of a more costeffective kind of stock option. By clearing the potentially messy hurdles involving taxes, accounting, SEC rules, and "transaction mechanics," Microsoft has opened the door for TSOs to be considered as an ongoing equitypay instrument, perhaps replacing standard stock options (which are not transferable). TSOs share the key advantages of restricted stock in terms of providing robust retention and ownership incentives and higher valuecost efficiency, while maintaining the key "leverage" advantage of options. In so doing, they create significant upside (and downside) while largely avoiding the "pay for pulse" problem of restricted stock. They also introduce the discipline of competitive pricing by third-party bidders. The bid prices of investment banks create nearly all of the information required for accurate estimates of option cost, which should foster greater board accountability and improved corporate governance.     

A Proposed Arbitration Mechanism to Ensure Free Trade in Livestock Products

Trade negotiations between Canada and the United States are to begin in the near future. For there to be an ongoing free movement of commodities the question of nontariff barriers must be addressed in the negotiations. Livestock commodities are particularly prone to nontariff barriers due to the public health aspects of domestic regulations and the perishability of the products. Potential nontariff barriers in livestock and meat products are identified and the problems of normal negotiation procedures outlined. A proposal for an arbitration mechanism for the settlement of disputes is developed. It's essential elements are pre-approval of changes to regulations, extremely short arbitration periods and decentralized adjudication.
Les négociations de commerce entre le Canada et les États-Unis commenceront bientôt. Pour avoir un mouvement continuel des denrées, la question des barrières nontarifaires doit être adressée dans les négotiations. Les denrées bestiaux sont particulièrement portées aux barrières nontarifaires à cause des aspects de la santé publique dans les régulations domestiques et la nature périssable des produits. On identifie les barrières nontarifaires potentielles en des produits bestiaux et de viande. On indique aussi les problèmes avec les processus de négotiation normale. Une proposition pour un mécanisme d'arbitrage pour la résolution des disputes est developpée. Les elements essentiels de cette proposition sont l'approbation en avance des changements aux régulations, les périodes d'arbitration très courtes et les prononcements de jugements décentralisés.     

Women's relative wage rate in The Netherlands, 1950–1983: A test of alternative discrimination theories

Summary This article presents the results of an inquiry into the relationship that is to be expected on theoretical grounds between women's wage rate compared to men's on the one hand and some macroeconomic variables on the other. Becker's discrimination theory is confronted with alternative theories. On the base of data for the Netherlands the authors investigate which theory is most suited to explain the development of women's relative wage rate for the period 1950–1983. They conclude that the results of the empirical analysis predominantly support Becker's theory.The authors wish to thank Mr. R. Haagsma and Professor C.K.F. Nieuwenburg for their comments on an earlier draft of this article. Furthermore, they are grateful to Miss M.J.R. Key for computational assistance.     

PROCYCLICAL RETAIL LABOUR PRODUCTIVITY*

The influence of lagged adjustment and consumer spending on retail labour productivity is investigated. Both influences result in a procyclical productivity pattern.     

Procedures for revising management judgments forecasts

Forecast improvement is often approached by attempting to find the “best” model for a given situation. Less attention has been paid to the possibility of examining past prediction errors for patterns that may suggest forecast adjustments for the future. This empirical study involves one firm’s management judgment forecasts for product sales and the attempts made to improve their accuracy by removing certain types of bias. In three of the five series examined, error reduction averaging close to thirty percent occurs as a result of the adjustment procedure. The other two series proved to be relatively free from bias and were therefore not in need of the correction method described.     

Varietal Licensing Standards and Canadian Wheat Exports

Canada's wheat grading system is largely based on visual criteria and it is based on relatively high quality standards. A strict varieties licensing system exists to maintain the integrity of the grade standards. One of the consequences of the licensing system is that higher yielding, lower or different quality wheats have not been grown in Canada until recently. The basic objective of this paper is to examine some of the consequences of the regulatory strategy of limiting wheat production to the traditional high quality wheats. This question is analyzed in the context of important changes in the international grain markets. Using a partial equilibrium trade model this paper estimates that if higher yielding wheats were permitted to be grown, annual producer gains would be 5 to 17 percent of current net farm income.
Le classement des blés au Canada est basé sur des critères visuels qui sont de hautes qualités. Le système actuel d'homologation des variétés est tel que l'intégrité de ce système est maintenue. En conséquent, ce système n'a pas encouragé la cultivation des blés de hauts rendements ou des varietés différentes que tout récemment. L'objectif principal de cette étude est d'examiner quelques unes des conséquences de la stratégic de la réglementation visant à limiter la production du blé aux variétés de hautes qualités. Cette question est adressée dans le contexte des changements importants qui ont eu lieu dans le marché international des grains. A l'aide d'un modèle d'équilibre partiel des échanges, la présente étude démontre gu'en permettant la production des blés de hauts rendements, le gain annuel aux producteurs serait de 5 à 17 pourcent du revenue agricole net.     

On the generalization of Rao,Hartley and Cochran's scheme

Summary The problem considered in this paper is a generalization of the usual Rao, Hartley and Cochran (RHC) scheme. In the usual RHC scheme the population ofN units is randomly divided inton groups wheren is the size of the sample. In this paper we propose to divide the population under consideration into (n+k) random groups wherek is some positive integer. Then a sample ofn groups is selected by using simple random sampling without replacement (SRSWOR). The expressions for the unbiased estimator of population total, its variance and the unbiased estimate of variance have been obtained under the proposed sheme. The condition under which the proposed sheme is more efficient than the usual RHC scheme has also been investigated.