The Taxation of Bonuses and its Effect on Executive Compensation - Evidence from the UK Experience

This paper explores the reaction of compensation components awarded to executive directors of UK financial institutions following the adoption of the bonus tax in December 2009. Excessive bonuses are blamed for encouraging risk taking and are regarded as one of the pull factors of the financial crisis. The British government attempted to reduce bonuses and accordingly corporate risk-taking by means of a special tax on cashbased bonuses. Using a comprehensive dataset on executive compensation we show that the introduction of the bonus tax decreased the net cash bonuses awarded to directors by about 43%, accompanied however by a simultaneous increase in other compensation components leaving both variable as well as total compensation unaffected. Hence, the incidence of the bonus tax was borne by the firms which compensated their managers for the decrease in cash-based compensation by awarding them different forms of pay. Consistent with this finding our data also suggests that firms reduced dividend pay-outs as a consequence of the bonus tax.

Do individual directors matter?

Paper 1: Pilot study of Swiss firms Abstract Using a fixed effects approach, we investigate whether the presence of specific individuals on Swiss firms’ boards affects firm performance and the policy choices they make. We find evidence for a substantial impact of these directors’ presence on their firms. Moreover, the director effects are correlated across policies and performance measures but uncorrelated to the directors’ background. We find these results interesting but conclude that they should to be substantiated on a dataset that is larger and better understood by researchers. Also, further tests are required to rule out methodological concerns. Paper 2: Evidence from the S&P 1,500 Abstract We ask whether directors on corporate boards contribute to firm performance as individuals. From the universe of the S&P 1,500 firms since 1996 we track 2,062 directors who serve on multiple boards over extended periods of time. Our initial findings suggest that the presence of these directors is associated with substantial performance shifts (director fixed effects). Closer examination shows that these effects are statistical artifacts and we conclude that directors are largely fungible. Moreover, we contribute to the discussion of the fixed effects method. In particular, we highlight that the selection of the randomization method is pivotal when generating placebo benchmarks. Paper 3: Robustness, statistical power, and important directors Abstract This article provides a better understanding of Senn’s (2014) findings: The outcome that individual directors are unrelated to firm performance proves robust against different estimation models and testing strategies. By looking at CEOs, the statistical power of the placebo benchmarking test is evaluated. We find that only the stronger tests are able to detect CEO fixed effects. However, these tests are not suitable to analyze directors. The suitable tests would detect director effects if the inter quartile range of the true effects amounted to 3 percentage points ROA. As Senn (2014) finds no such effects for outside directors in general, we focus on groups of particularly important directors (e.g., COBs, non-busy directors, successful directors). Overall, our evidence suggests that the members of these groups are not individually associated with firm performance either. Thus, we confirm that individual directors are largely fungible. If the individual has an effect on performance, it is of small magnitude.

Perception of non-invasive ventilation in adult Swiss intensive care units

The real utilisation scenario of non-invasive ventilation (NIV) in Swiss ICUs has never been reported. Using a survey methodology, we developed a questionnaire sent to the directors of the 79 adult ICUs to identify the perceived pattern of NIV utilisation. We obtained a response rate of 62%. The overall utilisation rate for NIV was 26% of all mechanical ventilations, but we found significant differences in the utilisation rates among different linguistic areas, ranging from 20% in the German part to 48% in the French part (p <0.01). NIV was mainly indicated for the acute exacerbations of COPD (AeCOPD), acute cardiogenic pulmonary edema (ACPE) and acute respiratory failure (ARF) in selected do-not-intubate patients. In ACPE, CPAP was much less used than bi-level ventilation and was still applied in AeCOPD. The first line interface was a facial mask (81%) and the preferred type of ventilator was an ICU machine with an NIV module (69%). The perceived use of NIV is generally high in Switzerland, but regional variations are remarkable. The indications of NIV use are in accordance with international guidelines. A high percentage of units consider selected do-not-intubate conditions as an important additional indication.

Executive functions in 5- to 8-year olds: Developmental changes and relationship to academic achievement

Pronounced improvements in executive functions (EF) during preschool years have been documented in cross-sectional studies. However, longitudinal evidence on EF development during the transition to school and predictive associations between early EF and later school achievement are still scarce. This study examined developmental changes in EF across three time-points, the predictive value of EF for mathematical, reading and spelling skills and explored children's specific academic attainment as a function of early EF. Participants were 323 children following regular education; 160 children were enrolled in prekindergarten (younger cohort: 69 months) and 163 children in kindergarten (older cohort: 78.4 months) at the first assessment. Various tasks of EF were administered three times with an interval of one year each. Mathematical, reading and spelling skills were measured at the last assessment. Individual background characteristics such as vocabulary, non-verbal intelligence and socioeconomic status were included as control variables. In both cohorts, changes in EF were substantial; improvements in EF, however, were larger in preschoolers than school-aged children. EF assessed in preschool accounted for substantial variability in mathematical, reading and spelling achievement two years later, with low EF being especially associated with significant academic disadvantages in early school years. Given that EF continue to develop from preschool into primary school years and that starting with low EF is associated with lower school achievement, EF may be considered as a marker or risk for academic disabilities.

Report of a European Society of Cardiology-European Association of Percutaneous Cardiovascular Interventions task force on the evaluation of coronary stents in Europe: executive summary.

The evaluation for European Union market approval of coronary stents falls under the Medical Device Directive that was adopted in 1993. Specific requirements for the assessment of coronary stents are laid out in supplementary advisory documents. In response to a call by the European Commission to make recommendations for a revision of the advisory document on the evaluation of coronary stents (Appendix 1 of MEDDEV 2.7.1), the European Society of Cardiology (ESC) and the European Association of Percutaneous Cardiovascular Interventions (EAPCI) established a Task Force to develop an expert advisory report. As basis for its report, the ESC-EAPCI Task Force reviewed existing processes, established a comprehensive list of all coronary drug-eluting stents that have received a CE mark to date, and undertook a systematic review of the literature of all published randomized clinical trials evaluating clinical and angiographic outcomes of coronary artery stents between 2002 and 2013. Based on these data, the TF provided recommendations to inform a new regulatory process for coronary stents. The main recommendations of the task force include implementation of a standardized non-clinical assessment of stents and a novel clinical evaluation pathway for market approval. The two-stage clinical evaluation plan includes recommendation for an initial pre-market trial with objective performance criteria (OPC) benchmarking using invasive imaging follow-up leading to conditional CE-mark approval and a subsequent mandatory, large-scale randomized trial with clinical endpoint evaluation leading to unconditional CE-mark. The data analysis from the systematic review of the Task Force may provide a basis for determination of OPC for use in future studies. This paper represents an executive summary of the Task Force's report.

Europeanization and the inclusive strategies of executive actors

In Europeanized policy domains, executive actors are considered especially powerful because they are directly responsible for international negotiations. However, in order to avoid failing in the ratification process, they are also highly dependent on the support of domestic, non-state actors. We argue that in Europeanized decision-making processes, state actors are not passively lobbied, but actively seek collaboration with - and support from - domestic actors. We apply stochastic actor-based modelling for network dynamics to collaboration data on two successive bilateral agreements on the free movement of persons between Switzerland and the European Union (EU). Results confirm our hypotheses that state actors are not passively lobbied, but actively look for collaboration with other actors, and especially with potential veto players and euro-sceptical actors from both the conservative Right and the Left.