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.

Essays on behavioral aspects of the design and disclosure of compensation contracts

This thesis consists of four essays on the design and disclosure of compensation contracts. Essays 1, 2 and 3 focus on behavioral aspects of mandatory compensation disclosure rules and of contract negotiations in agency relationships. The three experimental studies develop psychology- based theory and present results that deviate from standard economic predictions. Furthermore, the results of Essay 1 and 2 also have implications for firms’ discretion in how to communicate their top management’s incentives to the capital market. Essay 4 analyzes the role of fairness perceptions for the evaluation of executive compensation. For this purpose, two surveys targeting representative eligible voters as well as investment professionals were conducted. Essay 1 investigates the role of the detailed ‘Compensation Discussion and Analysis’, which is part of the Security and Exchange Commission’s 2006 regulation, on investors’ evaluations of executive performance. Compensation disclosure complying with this regulation clarifies the relationship between realized reported compensation and the underlying performance measures and their target achievement levels. The experimental findings suggest that the salient presentation of executives’ incentives inherent in the ‘Compensation Discussion and Analysis’ makes investors’ performance evaluations less outcome dependent. Therefore, investors’ judgment and investment decisions might be less affected by noisy environmental factors that drive financial performance. The results also suggest that fairness perceptions of compensation contracts are essential for investors’ performance evaluations in that more transparent disclosure increases the perceived fairness of compensation and the performance evaluation of managers who are not responsible for a bad financial performance. These results have important practical implications as firms might choose to communicate their top management’s incentive compensation more transparently in order to benefit from less volatile expectations about their future performance. Similar to the first experiment, the experiment described in Essay 2 addresses the question of more transparent compensation disclosure. However, other than the first experiment, the second experiment does not analyze the effect of a more salient presentation of contract information but the informational effect of contract information itself. For this purpose, the experiment tests two conditions in which the assessment of the compensation contracts’ incentive compatibility, which determines executive effort, is either possible or not. On the one hand, the results suggest that the quality of investors’ expectations about executive effort is improved, but on the other hand investors might over-adjust their prior expectations about executive effort if being confronted with an unexpected financial performance and under-adjust if the financial performance confirms their prior expectations. Therefore, in the experiment, more transparent compensation disclosure does not lead to more correct overall judgments of executive effort and to even lower processing quality of outcome information. These results add to the literature on disclosure which predominantly advocates more transparency. The findings of the experiment however, identify decreased information processing quality as a relevant disclosure cost category. Firms might therefore carefully evaluate the additional costs and benefits of more transparent compensation disclosure. Together with the results from the experiment in Essay 1, the two experiments on compensation disclosure imply that firms should rather focus on their discretion how to present their compensation disclosure to benefit from investors’ improved fairness perceptions and their spill-over on performance evaluation. Essay 3 studies the behavioral effects of contextual factors in recruitment processes that do not affect the employer’s or the applicant’s bargaining power from a standard economic perspective. In particular, the experiment studies two common characteristics of recruitment processes: Pre-contractual competition among job applicants and job applicants’ non-binding effort announcements as they might be made during job interviews. Despite the standard economic irrelevance of these factors, the experiment develops theory regarding the behavioral effects on employees’ subsequent effort provision and the employers’ contract design choices. The experimental findings largely support the predictions. More specifically, the results suggest that firms can benefit from increased effort and, therefore, may generate higher profits. Further, firms may seize a larger share of the employment relationship’s profit by highlighting the competitive aspects of the recruitment process and by requiring applicants to make announcements about their future effort. Finally, Essay 4 studies the role of fairness perceptions for the public evaluation of executive compensation. Although economic criteria for the design of incentive compensation generally do not make restrictive recommendations with regard to the amount of compensation, fairness perceptions might be relevant from the perspective of firms and standard setters. This is because behavioral theory has identified fairness as an important determinant of individuals’ judgment and decisions. However, although fairness concerns about executive compensation are often stated in the popular media and even in the literature, evidence on the meaning of fairness in the context of executive compensation is scarce and ambiguous. In order to inform practitioners and standard setters whether fairness concerns are exclusive to non-professionals or relevant for investment professionals as well, the two surveys presented in Essay 4 aim to find commonalities in the opinions of representative eligible voters and investments professionals. The results suggest that fairness is an important criterion for both groups. Especially, exposure to risk in the form of the variable compensation share is an important criterion shared by both groups. The higher the assumed variable share, the higher is the compensation amount to be perceived as fair. However, to a large extent, opinions on executive compensation depend on personality characteristics, and to some extent, investment professionals’ perceptions deviate systematically from those of non-professionals. The findings imply that firms might benefit from emphasizing the riskiness of their managers’ variable pay components and, therefore, the findings are also in line with those of Essay 1.

Can imagined whole-body rotations improve vestibular compensation?

Unilateral damage to the labyrinth and the vestibular nerve cause rotational vertigo, postural imbalance, oculomotor disorders and spatial disorientation. Electrophysiological investigations in animals revealed that such deficits are partly due to imbalanced spontaneous activity and sensitivity to motion in neurons located in the ipsilesional and contralesional vestibular nuclei. Neurophysiological reorganizations taking place in the vestibular nuclei are the basis of the decline of the symptoms over time, a phenomenon known as vestibular compensation. Vestibular compensation is facilitated by motor activity and sensory experience, and current rehabilitation programs favor physical activity during the acute stage of a unilateral vestibular loss. Unfortunately, vestibular-defective patients tend to develop strategies in order to avoid movements causing imbalance and nausea (in particular body movements towards the lesioned side), which impedes vestibular compensation. Neuroanatomical evidence suggests a cortical control of postural and oculomotor reflexes based on corticofugal projections to the vestibular nuclei and, therefore, the possibility to manipulate vestibular functions through top-down mechanisms. Based on evidence from neuroimaging studies showing that imagined whole-body movements can activate part of the vestibular cortex, we propose that mental imagery of whole-body rotations to the lesioned and to the healthy side will help rebalancing the activity in the ipsilesional and contralesional vestibular nuclei. Whether imagined whole-body rotations can improve vestibular compensation could be tested in a randomized controlled study in such patients beneficiating, or not, from a mental imagery training. If validated, this hypothesis will help developing a method contributing to reduce postural instability and falls in vestibular-defective patients. Imagined whole-body rotations thus could provide a simple, safe, home-based and self-administered therapeutic method with the potential to overcome the inconvenience related to physical movements.

Compensability index for compensation radiotherapy after treatment interruptions

Background The goal of our work was to develop a simple method to evaluate a compensation treatment after unplanned treatment interruptions with respect to their tumour- and normal tissue effect. Methods We developed a software tool in java programming language based on existing recommendations to compensate for treatment interruptions. In order to express and visualize the deviations from the originally planned tumour and normal tissue effects we defined the compensability index. Results The compensability index represents an evaluation of the suitability of compensatory radiotherapy in a single number based on the number of days used for compensation and the preference of preserving the originally planned tumour effect or not exceeding the originally planned normal tissue effect. An automated tool provides a method for quick evaluation of compensation treatments. Conclusions The compensability index calculation may serve as a decision support system based on existing and established recommendations.

Angiopoietin-1 and angiopoietin-2 share the same binding domains in the Tie-2 receptor involving the first Ig-like loop and the epidermal growth factor-like repeats

Angiopoietin-1 (Ang-1) and angiopoietin-2 (Ang-2) have been identified as ligands with different effector functions of the vascular assembly and maturation-mediating receptor tyrosine kinase Tie-2. To understand the molecular interactions of the angiopoietins with their receptor, we have studied the binding of Ang-1 and Ang-2 to the Tie-2 receptor. Enzyme-linked immunosorbent assay-based competition assays and co-immunoprecipitation experiments analyzing the binding of Ang-1 and Ang-2 to truncation mutants of the extracellular domain of Tie-2 showed that the first Ig-like loop of Tie-2 in combination with the epidermal growth factor (EGF)-like repeats (amino acids 1-360) is required for angiopoietin binding. The first Ig-like domain or the EGF-like repeats alone are not capable of binding Ang-1 and Ang-2. Concomitantly, we made the surprising finding that Tie-2 exon-2 knockout mice do express a mutated Tie-2 protein that lacks 104 amino acids of the first Ig-like domain. This mutant Tie-2 receptor is functionally inactive as shown by the lack of ligand binding and receptor phosphorylation. Collectively, the data show that the first 104 amino acids of the Tie-2 receptor are essential but not sufficient for angiopoietin binding. Conversely, the first 360 amino acids (Ig-like domain plus EGF-like repeats) of the Tie-2 receptor are necessary and sufficient to bind both Ang-1 and Ang-2, which suggests that differential receptor binding is not likely to be responsible for the different functions of Ang-1 and Ang-2.

Dosimetric impact of geometric errors due to respiratory motion prediction on dynamic multileaf collimator-based four-dimensional radiation delivery

The synchronization of dynamic multileaf collimator (DMLC) response with respiratory motion is critical to ensure the accuracy of DMLC-based four dimensional (4D) radiation delivery. In practice, however, a finite time delay (response time) between the acquisition of tumor position and multileaf collimator response necessitates predictive models of respiratory tumor motion to synchronize radiation delivery. Predicting a complex process such as respiratory motion introduces geometric errors, which have been reported in several publications. However, the dosimetric effect of such errors on 4D radiation delivery has not yet been investigated. Thus, our aim in this work was to quantify the dosimetric effects of geometric error due to prediction under several different conditions. Conformal and intensity modulated radiation therapy (IMRT) plans for a lung patient were generated for anterior-posterior/posterior-anterior (AP/PA) beam arrangements at 6 and 18 MV energies to provide planned dose distributions. Respiratory motion data was obtained from 60 diaphragm-motion fluoroscopy recordings from five patients. A linear adaptive filter was employed to predict the tumor position. The geometric error of prediction was defined as the absolute difference between predicted and actual positions at each diaphragm position. Distributions of geometric error of prediction were obtained for all of the respiratory motion data. Planned dose distributions were then convolved with distributions for the geometric error of prediction to obtain convolved dose distributions. The dosimetric effect of such geometric errors was determined as a function of several variables: response time (0-0.6 s), beam energy (6/18 MV), treatment delivery (3D/4D), treatment type (conformal/IMRT), beam direction (AP/PA), and breathing training type (free breathing/audio instruction/visual feedback). Dose difference and distance-to-agreement analysis was employed to quantify results. Based on our data, the dosimetric impact of prediction (a) increased with response time, (b) was larger for 3D radiation therapy as compared with 4D radiation therapy, (c) was relatively insensitive to change in beam energy and beam direction, (d) was greater for IMRT distributions as compared with conformal distributions, (e) was smaller than the dosimetric impact of latency, and (f) was greatest for respiration motion with audio instructions, followed by visual feedback and free breathing. Geometric errors of prediction that occur during 4D radiation delivery introduce dosimetric errors that are dependent on several factors, such as response time, treatment-delivery type, and beam energy. Even for relatively small response times of 0.6 s into the future, dosimetric errors due to prediction could approach delivery errors when respiratory motion is not accounted for at all. To reduce the dosimetric impact, better predictive models and/or shorter response times are required.

Exploring Water Governance Arrangements in the Swiss Alps From the Perspective of Adaptive Capacity

In times of increasing uncertainty because of climate and socioeconomic changes, the ability to deal with uncertainty and surprise is an essential requirement for the sustainability of alpine water governance. This article aims to contribute to the understanding of the adaptive capacity of water governance arrangements in the Swiss Alps and to propose options for reforms. To this purpose, we evaluated the current arrangements and the ways the actors have dealt with water shortages in the past, based on qualitative interviews and a document review. The research revealed that the adaptive capacity of the investigated arrangements is rather high with regard to reactive ways of responding to water shortage problems. However, there is limited capacity to proactively anticipate possible changes and to find prospective solutions on a regional scale. We conclude that with increased environmental and social pressures, forms of proactive water resource governance should be introduced, taking into account the welfare of people in both upstream and downstream areas.

Getting Old Here and There: Opportunities and Pitfalls of Transnational Care Arrangements

This article focuses on challenges of transnational aging and family care among „guest-workers‟ from Italy and Spain. It is based on two qualitative studies on aging in migration and experiences of family care. These migrants‟ situations tend to be socioeconomically underprivileged, yet they have the option to either stay in Switzerland or return to Italy or Spain. Our results show that an additional option is available by combining elements of both national systems of reference. However, these options are often costly and have short-comings which are particularly relevant when ill health conditions demand intensified care. By then, decisions taken within the context of transnational ways of living have far-reaching consequences that affect not only the elderly migrants but also their adult children. The empirical data presented in this article illustrate how specific constellations of caring options emerge from the Swiss „guest-worker‟ migration regime and from transnational practices and choices made in earlier years.

A social network-based approach to assess de facto independence of regulatory agencies

This article uses a policy network perspective to assess the independence of regulatory agencies (RAs) in liberalized public utility sectors. We focus on the de facto independence of RAs from elected politicians, regulatees and other co-regulators. We go further than previous studies, which only undertook a general analysis of the de jure independence of RAs from political authorities. Specifically, we apply a social network analysis (SNA), which concentrates on the attributes and relational profiles of all actors involved in new regulatory arrangements. The concept of de facto independence is applied to the Swiss telecommunications sector in order to provide initial empirical insights. Results clearly show that SNA indicators are an appropriate tool to identify the de facto independence of RAs and can improve knowledge about the issues arising from the emergence of the ‘regulatory State’.

Bipyridyl- and biphenyl-DNA: A recognition motif based on interstrand aromatic stacking

The synthesis and incorporation into oligonucleotides of C-nucleosides containing the two aromatic, non-hydrogen-bonding nucleobase substitutes biphenyl (I) and bipyridyl (Y) are described. Their homo- and hetero-recognition properties in different sequential arrangements were then investigated via UV-melting curve analysis, gel mobility assays, CD- and NMR spectroscopy. An NMR analysis of a dodecamer duplex containing one biphenyl pair in the center, as well as CD data on duplexes with multiple insertions provide further evidence for the zipper-like interstrand stacking motif that we proposed earlier based on molecular modeling. UV-thermal melting experiments with duplexes containing one to up to seven I- or Y base pairs revealed a constant increase in T(m) in the case of I and a constant decrease for Y. Mixed I/Y base pairs lead to stabilities in between the homoseries. Insertion of alternating I/abasic site- or Y/abasic site pairs strongly decreases the thermal stability of duplexes. Asymmetric distribution of I- or Y residues on either strand of the duplex were also investigated in this context. Duplexes with three natural base pairs at both ends and 50 % of I pairs in the center are still readily formed, while duplexes with blunt ended I pairs tend to aggregate unspecifically. Duplexes with one natural overhang at the end of a I-I base pair tract can both aggregate or form ordered duplexes, depending on the nature of the natural bases in the overhang

Biomass and Stored Carbohydrate Compensation after Above-Ground Biomass Removal in a Perennial Herb: Does Environmental Productivity Play a Role?

Many plant species are able to tolerate severe disturbance leading to removal of a substantial portion of the body by resprouting from intact or fragmented organs. Resprouting enables plants to compensate for biomass loss and complete their life cycles. The degree of disturbance tolerance, and hence the ecological advantage of damage tolerance (in contrast to alternative strategies), has been reported to be affected by environmental productivity. In our study, we examined the influence of soil nutrients (as an indicator of environmental productivity) on biomass and stored carbohydrate compensation after removal of aboveground parts in the perennial resprouter Plantago lanceolata. Specifically, we tested and compared the effects of nutrient availability on biomass and carbon storage in damaged and undamaged individuals. Damaged plants of P. lanceolata compensated neither in terms of biomass nor overall carbon storage. However, whereas in the nutrient-poor environment, root total non-structural carbohydrate concentrations (TNC) were similar for damaged and undamaged plants, in the nutrient-rich environment, damaged plants had remarkably higher TNC than undamaged plants. Based on TNC allocation patterns, we conclude that tolerance to disturbance is promoted in more productive environments, where higher photosynthetic efficiency allows for successful replenishment of carbohydrates. Although plants under nutrient-rich conditions did not compensate in terms of biomass or seed production, they entered winter with higher content of carbohydrates, which might result in better performance in the next growing season. This otherwise overlooked compensation mechanism might be responsible for inconsistent results reported from other studies.

Do executive dysfunction and freezing of gait in Parkinson's disease share the same neuroanatomical correlates?

Current hypotheses postulate a relationship between executive dysfunction and freezing of gait (FOG) in Parkinson's disease (PD). Hitherto, most evidence comes from entirely clinical approaches, while knowledge about this relationship on the morphological level is sparse. The aim of this study was therefore to assess the overlap of gray matter atrophy associated with FOG and executive dysfunction in PD. We included 18 PD patients with FOG and 20 without FOG in our analysis. A voxel-based morphometry approach was used to reveal voxel clusters in the gray matter which were associated with FOG and executive dysfunction as measured by the Frontal Assessment Battery, respectively. Conjunction analysis was applied to detect overlaps of the associated patterns. FOG correlated with different cortical clusters in the frontal and parietal lobes, whereas those associated with the FAB scores were, although widespread, widely confined to the frontal lobe. Conjunction analysis revealed a significant cluster of gray matter loss in the right dorsolateral prefrontal cortex. We could show that the patterns of neurodegeneration associated with FOG and executive dysfunction (as measured by the FAB) share atrophic changes in the same cortical areas. However, there is also a considerable number of cortical areas where neurodegenerative changes are only unique for either sign. Particularly, the involvement of parietal lobe areas seems to be more specific for FOG.

A generalisation of the fractional Brownian field based on non-Euclidean norms

We explore a generalisation of the L´evy fractional Brownian field on the Euclidean space based on replacing the Euclidean norm with another norm. A characterisation result for admissible norms yields a complete description of all self-similar Gaussian random fields with stationary increments. Several integral representations of the introduced random fields are derived. In a similar vein, several non-Euclidean variants of the fractional Poisson field are introduced and it is shown that they share the covariance structure with the fractional Brownian field and converge to it. The shape parameters of the Poisson and Brownian variants are related by convex geometry transforms, namely the radial pth mean body and the polar projection transforms.

A clinically applicable laser-based image-guided system for laparoscopic liver procedures

PURPOSE Laser range scanners (LRS) allow performing a surface scan without physical contact with the organ, yielding higher registration accuracy for image-guided surgery (IGS) systems. However, the use of LRS-based registration in laparoscopic liver surgery is still limited because current solutions are composed of expensive and bulky equipment which can hardly be integrated in a surgical scenario. METHODS In this work, we present a novel LRS-based IGS system for laparoscopic liver procedures. A triangulation process is formulated to compute the 3D coordinates of laser points by using the existing IGS system tracking devices. This allows the use of a compact and cost-effective LRS and therefore facilitates the integration into the laparoscopic setup. The 3D laser points are then reconstructed into a surface to register to the preoperative liver model using a multi-level registration process. RESULTS Experimental results show that the proposed system provides submillimeter scanning precision and accuracy comparable to those reported in the literature. Further quantitative analysis shows that the proposed system is able to achieve a patient-to-image registration accuracy, described as target registration error, of [Formula: see text]. CONCLUSIONS We believe that the presented approach will lead to a faster integration of LRS-based registration techniques in the surgical environment. Further studies will focus on optimizing scanning time and on the respiratory motion compensation.