Run by Bangor Business School - (Changsha)

10.000 Credits or 5.000 ECTS Credits

Semester 2

Organiser: Ms Wendy Ashurst

This module provides an in-depth analysis of executive compensation arrangements. It considers the incentive structures that are implicit in executive compensation contracts and how such incentives affects the behaviour and performance of the Chief Executive Officer (CEO) and other executives sitting on the board of directors. The module examines the notion of director heterogeneity and discusses how the individual characteristics of executives, such as, age, experience, education, nationality and gender could affect behaviour and firm performance outcomes. The module considers whether large or small pay differentials between CEO and other executives’ benefits firm performance. Focusing on the banking industry, the module discusses claims that compensation arrangements were a casual factor in the global banking crisis of 2008-09 before examining regulatory responses and initiatives on compensation since the crisis. Lastly, the module introduces the role of corporate culture.

Executive Compensation will provide a reader on the many exciting but often unexplained features of how firms remunerate their executive officers. Drawing on economic theory the module will examine how executive compensation contracts provide incentives for executives to behave in specific ways, what the benefits are of a heterogeneous board of directors, what effects might one expect from gender differences, how firms can set their compensation policy to enhance effort, and the increasing importance of culture in affecting executive behaviour and firm performance. The module will help to develop understanding by considering whether theoretical predictions are supported by empirical evidence.

C- to C+

C- to C+ (50-59%): Much of the relevant information and skills mostly accurately deployed. Adequate grasp of theoretical/conceptual/practical elements. Fair integration of theory/practice/information in the pursuit of the assessed work's objectives. Some evidence of the use of creative and reflective skills.

excellent

A- to A+ (70%+): Outstanding Performance. The relevant information accurately deployed. Excellent grasp of theoretical/conceptual/practice elements. Good integration of theory/practice/information in pursuit of the assessed work's objectives. Strong evidence of the use of creative and reflective skills.

threshold

D- to D+ (40-49%): No major omissions or inaccuracies in the deployment of information/skills. Some grasp of theoretical/conceptual/practical elements. Integration of theory/practice/information present intermittently in pursuit of the assessed work's objectives.

good

B- to B+ (60-69%): Very good performance Most of the relevant information accurately deployed. Good grasp of theoretical/conceptual/practical elements. Good integration of theory/practice/information in pursuit of the assessed work's objectives. Evidence of the use of creative and reflective skills.

1. Appreciate how board diversity and director heterogeneity can affect firm performance outcomes.

2. Demonstrate comprehension of the theories that explain the growth in executive pay and why firms willingly reward their CEOs with what many commentators suggest is excessively large compensation packages.

3. Exhibit a critical awareness of how the incentive structures that are implicit in executive compensation contracts affects the behaviour of executive officers, which, in turn, affects firm performance outcomes; and to consider whether firms can use compensation policy to deliver performance gains.

4. Critically evaluate whether executive compensation arrangements had failed and were a causal factor in the global banking crisis of 2008-09.

5. Review regulatory actions and proposals to reform compensation arrangements including the emerging importance of corporate culture within firms.

		Hours
Lecture	Lecture series.	20
Private study	Self-study based on the readings and reflection.	80

• Self-Management - Able to work unsupervised in an efficient, punctual and structured manner. To examine the outcomes of tasks and events, and judge levels of quality and importance
• Exploring - Able to investigate, research and consider alternatives
• Information retrieval - Able to access different and multiple sources of information
• Inter-personal - Able to question, actively listen, examine given answers and interact sensitevely with others
• Critical analysis & Problem Solving - Able to deconstruct and analyse problems or complex situations. To find solutions to problems through analyses and exploration of all possibilities using appropriate methods, rescources and creativity.
• Presentation - Able to clearly present information and explanations to an audience. Through the written or oral mode of communication accurately and concisely.
• Argument - Able to put forward, debate and justify an opinion or a course of action, with an individual or in a wider group setting
• Self-awareness & Reflectivity - Having an awareness of your own strengths, weaknesses, aims and objectives. Able to regularly review, evaluate and reflect upon the performance of yourself and others

Compulsory in courses:

• N392: BSc Banking & Finance (Bangor College, China) year 3 (BSC/BFINBC)