Monday, December 21, 2020

CEO pay at the crossroads of Wall Street and Main: Toward the strategic design of executive compensation.

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1) My understanding of the paper


Executive compensation has generated controversy related between the executive pay and the firm performance.


The lack of relationship has led to calls from for reform from various organizations (stakeholders, shareholders, etc.)


Linking compensation to objectives and performance measures emphasises short term profitability at the expense of the long term viability.


The base of evaluation market v/s accounting might be different in the way of evaluating performance strategically.


Combined ownership and control the incentive is not a threat because the manager is at the same time the owner. The principle of profit maximization is assumed to be sufficient to motivate and guide managers.


The separation of ownership and control are resumed in that the professional managers hold a small or in some cases none of the firm's equity.


Pay for performance is a double edged sword, it has been found that CEO wealth changes $.5 for every $1.000 in shareholders wealth. The level of executive's compensation is driven by firm size than by performance.


The governance problems will result in compensations based in high fixed salaries.


Performance based strategy will be based in accounting incentives and stock market incentive, both have been criticized for the emphasis on the short term and the effect on the decision horizons.


The use of balance scorecard that adds alternative criteria to evaluate has been used lately, the problem is the difficult and cost to use this system.


Accounting based compensation


The problem with accounting is that it reflects the past and not the impact on future decision, so using accounting is only effective in firms where the cash flow tends to be stable. Accounting is also useful where cost containments and operational efficiency are crucial.


Also the reason that accounting returns are allocable to lines of business they might be useful in diversified or multi-business firms.


Accounting will be useful in companies that pursue the following strategies


- cost leadership strategies


- slow and standard cycle resource profiles (protected by patents, regulations, or mass production technology, etc.)


- unrelated diversification strategies (the use of intense financial control)


- highly leveraged capital structures


Stock market based compensation


They generate a managerial myopia due to the pressure of the investors and other in the decision-making.


If investment in R&D will reflect in share price then the utilization of stock market incentives can be used.


Using market-based incentives is useful when the following strategies are used


- differentiation (competitive advantage by charging a premium price)


- fast cycle resource profile (rapid technological changes and innovation)


- high growth industries (rapid demand driven growth)


- related diversification strategies ((business units that operate in similar industries)


- restructuring strategies (spin offs)


Differed compensation and firm strategies


This is basically tomorrow payoff for today's performance. It has advantages hat it postpones the payment of taxes. They postpone income during the initial stages for a increase as there carers progress.


Stock operation serves as an example.


The firm strategy must be considered especially when the long terms and well-being are part of the company's strategy.


A combination of these schemes might be used but the most important thing to do is to identify the company's strategy.


) My local view


The models explained above are somehow limited locally due to existing law. Basically a major share holder cant received a salary (fixed or variable income) if he is working as an executive or manager of the company regardless the time dedicated to the job (full time or partial). The law clearly states that he can make anticipated withdrawals against profit but no salary is allowed.


In some cases this can be solved by legal structures that can only be agreed when the concentration of the ownership of the company is limited to a close circle. Also there are some cases where there are preferred shares that allow to control.


It is also not allowed under the existing law to give shares to someone and after they leave the company to return the shares.


A combination of accounting ands stock based compensation in line with the company's objectives is used manly in international companies or big ones. In the medium to small ones what is normally found is a fix salary with a bonus linked to accounting results.


The above is also related with the local culture that is clearly adverse to risk, so they prefer to have a fixed salary and be certain that it will be paid monthly and that the goals are clearly set.


Also restrictions imposed by law, the rigidity of the labour law (where a big effort in order to make it more flexible is being done) play against variable structures (the indemnity of firing someone will be calculated on the past months salaries).


) My experience


In our office (a reinsurance broker) we have people of different educational levels and cultures working.


Being a small office with 8 people working income and production is in everyone's mind so a good year is know by all of the office member as well as bad one.


There are no secrets regarding income as well as the offices profit.


Regarding salaries for the admin's we pay high above market (more than 50%) with lots of additional benefits and we did include a variable part (that was not asked by them) in order to compensate them for the good company's result.


Our general manager (also the local owner) has a small fixed salary (10% of his income) and his major income is out of the company's results. Due to the nature of the business the income is deferred in some cases in a year so a long term view is necessary.


As a result of that we are one of the few brokers with a stable base of client and our growth has been consistent over time increasing the owners profit with a stable and steady growth.


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Friday, December 18, 2020

Affirmitive action

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Capital Punishment


The goal of my paper is to point out the injustices in capital punishment. I will focus on the immoralities in legalized murder, the justices system in general, statistics, and comparisons.


Thesis Looking out for the state of the publics satisfaction in the scheme of


capital sentencing does not constitute serving justice.


An evil deed is not redeemed by an evil deed of retaliation. Justice is never advanced in the taking of human life. Morality is never upheld by legalized murder.


- Coretta Scott King


Capital Punishment


The goal of my paper is to point out the injustices in capital punishment. I will focus on the immoralities in legalized murder, the justices system in general, statistics, and comparisons.


Words Count 16


Pages


Outline


Thesis Handguns should be outlawed with the exception of law enforcement


purposes.


I. Why Not Real Gun Control?


A. Handguns are too easily accessible to Americas youth.


II. Kids A Deadly Force.


A. Kids are killing each other all across America.


III. A Look At The Brady Bill


IV. The Economics of Crime.


A. Americans are spending too much money each year to protect themselves.


V. Charts and Figures.


A. Where Americans are spending all their money on protection.


Handgun Control in the United States


Handguns should be outlawed in the United States with the exception of law enforcement


purposes. Two weeks before Christmas Day, 187, 17 year-old Kendall Merriweather was shot


and killed a few blocks from his high school in southeast Washington, D.C. Police arrested two


teenage students who they believe killed Merriweather while trying to steal his boom box radio.


A few days earlier, in Pasadena, Texas, a 14-year-old eight grader at Deepwater Junior


High School whipped a snub-nosed .8 out of his jacket and held the assistant principal hostage


for two hours. Police said the boy was distraught over his parents recent separation. (Stanza 1)


These were not isolated incidents. All across America, the number of kids using- and being


harmed by-guns is rising at an alarming rate. According to the U.S. Department of Justice,


more than 7,000 youths between 1 and 15 were handgun victims in 185, up from an average


of 16,500 for each of the previous years (Stanza 1). The increase in gun use often stems from


urban crack trade. Many crack gangs have more firepower than a small police department.


Whatever the cause, authorities are finding the use of handguns by youngsters an extremely diff-


icult trend to stop ( Stanza 1). As long as pistols are as easily accessible as candy, people of all


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An evil deed is not redeemed by an evil deed of retaliation. Justice is never advanced in the taking of human life. Morality is never upheld by legalized murder.


- Coretta Scott King


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Thursday, December 17, 2020

I love to eat

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The vibrations from an earthquake are transmitted into the structure of the building. The way the building behaves depends on the natural frequency of the structure. For example, in some cases the building will sway in sync with the vibrations. When this occurs, each oscillation of the structure builds on the one before causing the amount the building deflects to increase. In other cases, the sway of the building is not in sync with the vibrations of the ground. In such cases, consecutive movements of the ground may actually decrease the amount the building moves. Since a buildings height and structural characteristics dictate its natural frequency, it is possible for tall buildings to fair better than short buildings during an earthquake. A simple device can be built to demonstrate this concept. Use a 14 long x4 as a base. Cut four lengths of 1/4 wood dowel, each having a different length. The shortest should be about 1 long and the longest about 6 long. The other two dowels can have lengths somewhere in between. Drill equally space holes in the x4 base and insert the dowels. The order is not important. Next, drill 1/4 holes in four old tennis balls and place one over the end of each dowel. Using a smooth motion with an amplitude of about 4, push the apparatus back-and-forth and observe how each ball/dowel behaves. You should notice that the ball on top of the tall dowel may not move as much as the ball on top of a shorter one. Try smaller or larger amplitudes and different frequencies (back-and-forth speeds). Do the balls behave differently? As for being safer in a taller building, there is no way of being sure. Each building and each earthquake will have their own natural frequency. Sometimes they may match and other times they may not. To be safe during an earthquake, stay away from glass objects and heavy things such as bookcases and filing cabinets. Always try to stand under a door frame since they tend to provide support for the ceiling. A pendulum is a simple potential energy (PE) and kinetic energy (KE) device. Once you start the pendulum bob moving you have defined the total energy of the system. The total energy is related to the height of the bob when it was released. As the pendulum moves towards the bottom of the swing (height decreases) it speeds up so the total energy of the system remains constant (PE decreases and KE increases). When you shorten the string as the bob swings, the system energy must stay the same due to the conservation of energy. If the string is shorter, the bob must swing up to a greater angle in order to maintain the same PE. Since the linear velocity of the bob is a function of the sting length, the bob must move faster to maintain the same KE at the bottom of the swing. As a result, the pendulum will swing higher and faster as the string is shortened. The reverse happens when the string is made longer. If you perform a careful experiment to explore this concept you may notice that they system does not behave exactly as theory would predict. This is due in part to losses such as friction and air resistance. The Guide to Developing a Model Rocket Simulation outlines how to write a simple computer simulation for a pendulum. You could use the computer simulation to conduct virtual experiments on pendulums.


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Wednesday, December 16, 2020

The Value of a Diverse Workforce in Modern Times

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There are several reasons why a diverse workforce will add value to a company. Most businesses, either large or small, work on a global scale; the information age has brought the entire world a lot closer. Having associates that can deal with different cultures around the world is crucial to an expanding business. A diverse workforce will help to build more rounded individuals with experience they will gain from a mixed environment. Customers will benefit from the diverse workforce because a company that makes a choice to be open and flexible with its associates will more than likely be easy to work with in a business relationship. Probably the most important aspect of having a diverse workforce is the vast knowledge gained by pooling of the different life lessons, cultures and experience together allowing everyone the chance to learn new and different business practices.


The Army and Air Force Exchange Service defines diversity as valuing the concerns and desires of both the workforce and customers by establishing a common bond with them, where the individual uniqueness is appreciated and differences are respected. Diversity promotes a corporate community and harmony, which maximizes personal talents and experiences, responds to the needs of all associates and enriches the climate for customers and associate satisfaction (AAFES. 00). As a worldwide corporation AAFES certainly knows the value of a diversified workforce. Each part of the world they operate in has its own set of cultural significances which need to have a workforce that can handle those differences but also maintain the standards of the company. They have formed a strong workforce despite the diversity they are faced with because they have trained their associates to have respect for individual differences.


The Freeman Institute offers seminars to companies looking to increase their insight and train their associates in the area of diversity. Their Philosophy in presenting the subject of diversity is best understood when considering an onion with its many layers. Each layer presents another opportunity to discuss the best ways to work together with greater harmony, understanding and mutual respect (Dr. Freeman. 00). Each person brings a different cultural background into a company; there are obvious differences such as race, gender, professional status and disabilities. There are a lot of unseen differences that associates and managers must consider such as religion, sexual orientation, musical taste and individual styles.


The different personalities and life experiences that are brought into a company by people of diverse backgrounds reach far and wide. The company needs to embrace these differences and use them to develop a uniquely molded team. Everyone has strengths and weaknesses in their work ability and personalities. A manager that can pick out associates strengths and use them to benefit the rest of the workplace has taken a huge step in unifying their company. Using the diverse backgrounds of each associate properly will add tremendously to the problem solving area of a business. The different ideas and solutions that each persons brings to problem solving meeting, the better equipped the team will be to conquer tough opportunities with an array of different outlooks.


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Each person also brings with them a special gift or talent. If we use an analogy that a business is like a human body, not everyone can be the head or the foot. Each individual part of a body working in unison focused on a single goal will accomplish a task. Without the wrist the fingers are useless, without the shoulder the arm, hand and fingers are useless. We can see it takes the combination of various specialty parts to make up a whole body (Apostle Paul. 67AD). A company has many different parts (people) that have different talents, when used properly they can be combined and focused toward one single goal.


Workforce diversity is dealt with through the doorway of our own unique personality styles (Dr. Freeman. 00). Training and understanding of the diversity issue is the most important step to developing a workforce that has no diversity barriers. Company guidelines and mandates will work to a degree, but companies that can train their associates to look inside themselves and gain a good understanding of their personal differences and cultural diversities will have a much easier time training them to accept others. Diversity consciousness cannot be simply mandated into a system, integrated into a corporate culture, or prompted by financial incentives. It is reflective of an attitude that organizations and their staffs must adopt that allows them to change their basic concepts about workers and converts "them" into "us" (Becker, Erviti, Shelley. 17). One of the keys to handling the issue of workforce diversity is also mutual respect for each individual which creates and attitude in the workplace that will eventually lead to a melting of personalities into one uniform culture.


In conclusion, it is quite obvious as we look around in America that the culture of the country is changing. Companies that dont take serious action and develop or expedite cultural diversity training will soon find themselves in a whirlpool of personalities and conflicts which may be too much to overcome. The internet has made the world a lot smaller, people of all cultures and nationalities are mixing constantly and in business there is no room for bigotry or prejudices against any other group of people. Businesses that develop sound plans for training and understanding of cultural diversity issue will be on the cutting edge of making their companies sound by using all of the talents and ideas given to them by the combination of associates they have. The workplace will be an enjoyable atmosphere which will trickle over and be experienced by their customers.


References


The Army and Air Force Exchange Service (AAFES) (00)


http//odin.aafes.com/Employment/dvrsty.asp


Becker B., Erviti M., Shelley A. (17).


Managing Workplace Diversity.


http//alexia.lis.uiuc.edu/~lis405/diversity/intro.htm


Zondervan. (1). New Life Study Bible


Apostle Pauls Letter to the Romans. Chapter 14-6


Dr. Freeman A.J. (00) Diversity, People who Drive You Crazy.


http//www.freemaninstitute.com/diversity.htm


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Tuesday, December 15, 2020

Tournier v National Provincial & Union Bank of England (1924)

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As is well known, the great case of Tournier v National Provincial and Union Bank of England held that a bank owes a duty of confidentiality to its customers. The duty extends at least to information concerning account transactions and extends beyond the date of the termination of the banker customer contract. Information attained from other sources, like a credit agency, is also covered by the duty. The duty is not absolute for the bank may disclose information where the disclosure is under compulsion by law, where there is a duty to the public to disclose, where the interests of the bank require disclosure and where the disclosure is made by the express or implied consent of the customer.


Tournier had an overdraft with the defendant bank. He had made arrangements to make payments toward the reduction of the overdraft, but after only three installments ceased to make further payments. Tournier was the payee of a cheque drawn by Woldingham Traders Ld. Rather than deposit the cheque in his account with the defendant bank; he indorsed the cheque to a customer of the London City and Midland Bank. The defendant bank came to know about the cheque by virtue of the fact that Woldingham was a customer. Upon seeing the cheque presented for payment the manager rang the appropriate branch of the London City and Midland Bank to enquire as to the identity of their customer. It was learned that the endorsee was a bookmaker, a person who accepts and pays off bets.


The manager then rang the employers of Tournier and had conversations with two of the directors. The actual contents of that conversation are not clear, but it was alleged that the manager informed them that Tournier was having dealings with a bookmaker. As a consequence of that communication the employer refused to renew Tourniers contract of employment. Tournier sued both in defamation and for breach of contract. He lost at first instance and appealed with respect to both heads primarily on the grounds that the judge had instructed the jury erroneously. He succeeded in the Court of Appeal with respect to both claims, the Court ordering a new trial and Tournier eventually won the case.


This case established 4 major exceptions.


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a) With the customers consent.


Traditionally, a bank would make a status enquiry about a customers credit standing with another bank. The customer would usually have no knowledge of this enquiry. Today, the bank must seek the customers permission to release such information. However, Tourniers case laid out that an implied consent is created to disclose information if the customer gives his bank as a reference.


b) Under compulsion of law.


There are various situations where a bank may be legally compelled to disclose information about a customers affairs. One of these is compulsion by court order. This could be used to assist in the investigation of a criminal offence under


- Bankers Books Evidence Act 187


- Police & Criminal Evidence Act 184.


- Drug Trafficking Offences Act 186.


The Police, however, must have a reasonable suspicion of crime and cannot use it to search for evidence.


Another situation where a bank must disclose information legally is upon receiving a valid request from an authorized official. This could be under the following acts


Taxes Management Act 170 - Information required by the Inland Revenue.


Companies Act 185 - Company information required by DTI.


Criminal Justice Act 187 - Set up the Serious Fraud Office to investigate fraud.


Financial Services Act 186 - To investigate insider dealing.


Sometimes the bank is under no direct compulsion to disclose information, but statutory protection is given. This situation arises when a crime may be committed if the information is not disclosed.


- Drug Trafficking Act 14.


- Criminal Justice Act 1.


It is a criminal offence to assist a money launderer to obtain, hide, keep or invest funds if you know or suspect that the funds are a result of a crime. It is also a criminal offence to fail to disclose to the police knowledge or suspicion of money laundering activities related to terrorist or drug related activities. It is an offence to disclose information to a customer or third party information on money laundering that has been passed to the police. Whilst suspicion is not defined, any employee who reports any suspicions according to the banks procedures will have complied with the regulations.


c) Where disclosure is in the banks interest.


This exception applies where the bank has to reveal details of a customers account in court when taking legal action. It was successfully used in the Sunderland v Barclays Bank case in 18. The case tells that Mrs. Sunderland issued a cheque and it was dishonored because of insufficient funds in her account. She called the bank and argued with them, but when her husband picked up the phone to discuss the matter with the bank, he was told about his wifes gambling. Sunderland sued the bank for disclosing that information, but the bank succeeded as it was in the banks interest and the account balance would also be disclosed to the public in court.


Another situation where this exception applies is disclosure to credit rating agencies when the customer has failed to make payments on a loan. However, the customer must be notified of this prior to the disclosure but he cannot halt the disclosure unless he makes the payments.


d) Where disclosure is in the public interest.


This hardly ever arises in practice, banks preferring to rely on the customers consent or on compulsion of law. It has been suggested that it may apply to trading with the enemy in time of war. In 186, then President Ronald Reagan ordered the freezing of Libyan assets held in the US right after the US obtained information about Libyan government accounts with Bankers Trust [Libyan Arab Foreign Bank v Bankers Trust (18)]. The court, however, never made clear if the disclosure in public interest exception applied in this case. • Roberts, Graham. Law Relating to Financial Services. London Chartered Institute of Bankers, 00.


• Confidential Information, Microsoft® Encarta® Online Encyclopedia 00


• Alan L Tyree, Does Tournier apply to Building Societies? 17. http//www.law.usyd.edu.au/~alant/tournier.html.


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Monday, December 14, 2020

What are the Effects of War?

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War, as a rule, changes all aspects of society and beyond. Women, as an example, had very few rights or opportunities before WWI, but, during the war there was a shortage in the amount of people who were left behind to perform tasks such as working in factories. The cure for this became the placement of women in factory jobs, which raised the percentage of women who had employment up to 40%. Considering that women were not even considered people at this time this number is outstanding, and really gave women a hope of being considered an important part of society. It also provided a change in the standard family. After war, when the men return, there is a significant shift in the way things worked once again. Many men who left to fight in wars as productive, healthy men return to their homes as disfigured, sickly, or completely useless. Societies with men who are returning disfigured do have to adjust to their needs. An example is the men without faces. These men returned with horrible disfigurements which caused then to have issues with depression and self image. Advances in technology were made and prosthetics became available to people so that they could resume their lives, and gain better self perception. From war advances in technology were also made regarding weaponry. In WW1 the need for a drastic new weapon was established, and thus came the tank. It not only evolved from a self propelled gun, but changed drastically with new improvements in armament and teething throughout WW. In WW advances were made in many other weapons such as the monoplanes which by the end of the war had become jet planes. Because of the advances in weaponry the style that wars were fought in also changed from trench warfare to field because of the German realization that they could not efficiently fight and win a war if they simply fought it in trenches. Despite their best efforts, the German's did not manage to win either WW1 of WW. This caused a drastic change in the government. Before WW1 Germany had been a monarchy, and afterwards it evolved into a republic, and then a dictatorship once Hitler had been voted in, and then once again after WW the country became a Republic. The governmental systems changed because they were not efficient or because they had angered another country, however, without the wars the governments may have stayed the same, Germany may still be a monarchy, and Hitler may not have been a problem. The fact that Hitler was left in power for so long was a clear statement about the attitude that other countries had after WW1. Because war had been so glorified before WW1 people were more eager to go and fight in it, countries were more eager to have their war, even if the basis for it was just an assassination. After the countries realized the effects that war had on their country they were not as eager to partake in one again, even though they had a more justifiable reason. It is quite common to see peace protestors, such as the hippies, in times of war and it seems that with each passing war more and more people become opposed by the idea, and realize the lack of romanticism in that act. Destruction of this idea occurred as the lives of families and the infrastructure of cities was also being destroyed. Many changes took place in the architecture of cities because during the WW1 and WW many buildings were destroyed. Historical places such as the Residenz, which housed Kings in Munich, were nearly destroyed by enemy forces. This forces not only the rebuilding and restoring of many buildings, but also a complete change in the appearance of cities from those with many Victorian structures, to more modern buildings. War causes major changes to everything that it touches.


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The Sixth Beatitude

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The Sixth Beatitude can be generalized into three particular teachings which each person must acquire in order to be affluent in his or her life, explicitly, love, respect and concern for others.


A person is likely to love others the same way as he loves himself. This Beatitude is teaching us to love endlessly not only ourselves but also others. It teaches us that in order to continue living in this society, we should learn and discern how to cooperate with one another. It is true that it is very difficult to just always get along or in other words, parating nakikisama (Filipino; always getting along). Though it is reasonable for a person to refuse or to stop loving in the end, we should understand that in this world, there can¡¯t be two people always accepting, there should always be one giving. Like in a family, all the members must be considerate. Take for instance a family whose padre de familia (Spanish; head of the family) works all day, waking early in the morning, sending his children to school and then going home late because he still waits for his children to finish studying in their tutor. And then when they reach home, the father just wanted his kid to make him a cup of tea, but the kid refuses. This example just show how inconsiderate the kid is, after all his father has done for him, which is very tiring, the father just wanted a very simple favor from him and he still has the nerve to rebuff.


As we all know, we are created in the image and likeness of God. Therefore, we are expected to respect not only ourselves but also others. This Beatitude instructs us that respect should not only apply to influential, wealthy and prominent people, but also to the deprived, because in the eye of God, we are all equal. We are brothers and sisters in Christ, and in a family, it is very important to have respect with each other. In order to earn the respect of other people, we should also learn how to respect them. At home, we already consider our maids as an extension of our family, though they still do not eat with us, we make sure that every Sunday, they are still able to attend mass. We are certain that they eat the right kind of food, sleep in a comfortable place, and receive the right amount of salary, for the reason that we deem that they are like us who wants to be treated as human beings.


Showing concern for a person makes the person feel that he is not alone. We constantly covet to have that kind of feeling because we know that whatever we do, we are accompanied and escorted. There is someone who supports us. A baby needs a mother¡¯s care while he is still young. A family¡¯s support is very important for a person especially when he needs to make a very big decision. We cannot say that a person doesn¡¯t need the concern of other people, because a person can¡¯t live alone, he needs a companion. That is why I agree that even a person is already old, he can still get married to have someone to live with when the time comes he needs someone to care for him.


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Truly, love, respect and concern for others can be the generalization of the teachings of the Sixth Beatitude which is ¡°Blessed are the pure in heart, for they shall see God.¡±


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