tWe use a hand-collected international database to analyze the change in the risk-taking incentivesembedded in bank executive compensation after the onset of the global financial crisis. Our results reveala reduction in both the risk sensitivity of stock option grants (vega) and total and cash pay-risk sensi-tivities in countries suffering systemic banking crises. This reduction is greater in countries with strongshareholder protection, especially in banks with good corporate governance, solvent banks, and banksthat suffered a reduction in their specific investment opportunity set. The regressions control for govern-ment intervention, banking development, and crisis intensity. Our results confirm that the contractinghypothesis is more relevant in countries with stronger shareholder protection, and provide support formeasures improving shareholder rights in the approval of bank executive compensation.
Keywords:Executive compensation | Banking crises | Bank risk | Bank performance | Shareholder protection

A payment for ecosystem services mechanism is designed to support an environmental enterprise aimed at controlling Lantana camara, an invasive weed that is costly to eradicate. A forest reserve manager engages the local community in lantana control efforts. The community converts the weeds into household durable items for sale. However, as markets for such products may not account for the environmental services generated through weed control, the enterprise could fail for want of additional financial support. The challenge addressed in this paper is to incorporate the full environmental benefits of the weed-based enterprise and provide adequate compensation to the local community. An optimal compensation mechanism is derived through linking the ecological dimension of weed growth to its impact on biodiversity values within the reserve. Results indicate that optimal payments to the community would need to take into consideration both the value addition to the environment from controlling the invasive weed and the opportunity cost of participation by the community. When there exists a risk of enterprise failure due to low profitability, higher payments by the manager are required. However, the best environmental outcomes are obtained when the manager incorporates the welfare of the local community within the utility function.
Keywords: Lantana camara | Invasive weed | Environmental enterprise | Payments for ecosystem services | Environmental service | Biodiversity conservation

Understanding the effects of taxes on executive compensation provides insight into the process determining this compensation and is a key input to top income tax rate policy. A 2010 tax reform in Canada, which greatly increased the effective tax rate on stock option compensation for a subset of firms, provides a natural experiment with which to address this issue. Difference-in-differences estimates suggest that this tax increase resulted in an immediate reduction in both stock option grants and the fraction of total compensation made up of stock options with limited, if any, substitution towards other components of compensation.
keywords: Executive compensation |Taxation |Stock options

In this paper, coordination of a manufacturer-retailer chain is investigated where the manufacturer innovates in manufacturing process and the retailer applies promotional efforts. The market demand is assumed to be stochastic dependent on the retailers promotional and the manufacturers innovation efforts. The retailer uses a periodic review inventory system for replenishing items and decides on order-up-to level, review period and promotional efforts level. On the other hand, it is possible for the manufacturer to boost the market demand by innovation in manufacturing process. The retailers promotional and manufacturers innovation efforts not only affect their profits, but also impress their mutual profits and the supply chain performance in an indirect manner. Firstly, we develop the decentralized and centralized decision-making models along with solution procedures and concavity analysis to solve the models. Although the centralized model improves the profitability of the whole supply chain, it may reduce the profitability of either the retailer or the manufacturer. Therefore, we propose a new compensation-based wholesale price contract for encouraging actors to take part in the joint decision-making scheme. Moreover, a profit sharing strategy based on the bargaining power of members is proposed for distributing the surplus profit between members. Finally, the results of the decentralized, centralized and coordination models are compared using test problems and some sensitivity analyses are presented.
keywords: Supply chain coordination |Promotional and innovation |Periodic review |Inventory system |Compensation |Wholesale price contract |Profit sharing

The usefulness of the CEO-to-employee pay ratio disclosure to investors is subject to significant debate. Our experiment examines participant responses to higher-than-industry and comparable-to-industry pay ratio disclosures in a company. A prior experiment by Kelly and Seow (2016) (hereafter KS) found that incrementally disclosing a higher-than-industry pay ratio on top of higher-than-industry CEO pay had indirect negative effects on the company’s perceived investment potential, via negative perceptions about the fairness of the CEO pay and workplace climate. We find that the negative indirect effects of pay ratio disclosures on perceived investment potential in KS are replicable in our study, and for a less extreme comparable-to-industry pay ratio. We do not find evidence that the effects of incremental pay ratio disclosure on investor perceptions are stronger when the pay ratio is higher-than-industry than when it is comparable-to-industry. Our study suggests that the ability of pay ratio disclosures to impact investor perceptions extends across a range of pay ratios.
keywords: CEO compensation disclosure| CEO-to-employee pay ratio| Investor perceptions