CEO compensation, option incentives and information disclosure

This paper examines the impact of information disclosure on the valuation of CEO options and the incentives created by those options. Prior executive compensation research in the US has made assumptions about key input variables that can affect the calculation of option values and financial incentives. Accordingly, biases may have ensued due to incomplete information disclosure about noncurrent option grants. Using new data on a sample of UK CEOs, we value executive option holdings and incentives for the first time and estimate the levels of distortion created by the less than complete US-style disclosure requirements. We also investigate the levels of distortion in the UK for the minority of companies that choose to reveal only partial information. Our results suggest that there have to date been few economic biases arising from less than complete information disclosure. Furthermore, we demonstrate that researchers using US data, who made reasonable assumptions about the inputs of noncurrent option grants, are unlikely to have made significant errors when calculating CEO financial incentives or option wealth. However, the recent downturn in the US stock market could result in the same assumptions, producing exaggerated incentive estimates in the future.

An evaluation of thermal plasmas in pyrometallurgy

The development of reliable, high powered plasma generators has resulted in many plasma processes being proposed as alternatives to existing pyrometallurgical technologies. This work evaluates the advantages and disadvantages of plasma systems by reviewing plasma generators, their integration with reactors and the process economics. Many plasma systems were shown to be technically and economically superior to existing technologies, but some of the plasma system advantages quoted in the literature were found to be impractical because of other system constraints. Process applications were limited by the power inputs available from plasma generators compared to AC electric furnaces. A series of trials were conducted where chromite and steelplant baghouse dusts were smelted in the Tetronics' 2.0 MW transferred arc/open bath reactor to confirm the operating characteristics of the plasma system and its economics. Chromite smelting was technical superior to submerged arc furnace technology, but the economics were unfavourable because of the limited power available from the water-cooled plasma torch and the high electrical energy consumption. A DC graphite electrode plasma furnace using preheated and prereduced chromite concentrates will compete economically with the submerged arc furnace. Ni, Cr and Mo were economically recovered from high alloy content steelplant dusts for recycling. Five Electric Arc Furnace dusts were smelted to produce a non-toxic residue and recover the contained zinc to an enriched zinc oxide product for recycling. It should be possible to condense the zinc vapour directly in a zinc splash condenser to increase the value of the product. Because of the limited power available from plasma generators, plasma processes will be most suitable for treating high and medium value materials such as Au, Pt, Mo, Ni, Ti, V, Cr etc at small production rates, heating metals in tundishes and ladles and remelting superalloy scrap. The treatment of environmentally hazardous waste materials is a particularly interesting application because of the additional financial incentives. Non-transferred arc plasma generators will be used for air and gas preheating in blast furnaces to reduce metallurgical coke consumptions.