Papers by Stephen O'Byrne
Journal of Applied Corporate Finance, Jun 1, 1992
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Harvard Deusto business review, 2006
ABSTRACT
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Journal of Applied Corporate Finance, Mar 1, 2018
A leading compensation practitioner reviews “Say on Pay” rules, those corporate practices giving ... more A leading compensation practitioner reviews “Say on Pay” rules, those corporate practices giving shareholders the right to vote on executive compensation. The assumption behind “Say on Pay” is that managers may be overpaid because directors fail to provide adequate oversight. O'Byrne questions this underlying assumption.He provides substantial evidence that directors do a poor job overseeing executive pay and that directors have weak incentives to pursue shareholder interests in executive pay. He also finds that “Say on Pay voting is sensitive to differences in pay for performance, but so forgiving that extraordinary pay premiums are required to elicit a majority ‘no’ vote”; and “that three quarters of institutional investors have lower SOP voting quality… than the average investor and almost all have a short‐term focus, with much greater vote sensitivity to current year grant date pay premiums than to long‐term pay alignment and cost.”The common corporate practice of providing competitive target compensation regardless of past performance leads to low alignment of pay and performance. Unfortunately, directors have little incentive to protect shareholder interests “because they are paid labor providers, just like management, not stewards of substantial personal capital.”
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Social Science Research Network, 2015
This paper highlights the strengths and weaknesses of the U.S. Securities & Exchange Commissi... more This paper highlights the strengths and weaknesses of the U.S. Securities & Exchange Commission’s (SEC’s) proposed rules on disclosure of pay versus performance, makes several suggestions to improve the proposed rules, presents some surprising data showing that CEO pay is much more highly correlated with gross TSR than relative TSR, explains the importance of “industry beta” in making relative TSR an accurate measure of management performance and shows that for companies with negative industry betas – about one company in six – paying for TSR is paying for management performance. The key weakness of the proposed rules is that the SEC’s interpretation of “compensation actually paid” – the statutory language – undermines the matching of pay and performance periods and makes pay for performance look much worse than it really is. Our key suggestion for improvement is an alternative interpretation that does match pay and performance periods. The paper concludes with a discussion of the comment letter writers who criticize the SEC’s use of TSR as a measure of management performance. They identify the right problem – factors beyond management control – but make unpersuasive arguments for using operating measures instead of relative TSR taking account of industry beta.
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Journal of Applied Corporate Finance, Jun 1, 2013
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Journal of Applied Corporate Finance, Jun 1, 1995
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Journal of Applied Corporate Finance, Jun 1, 1999
ABSTRACT This paper responds to the article by Biddle, Bowen, and Wallace (BBW) by suggesting tha... more ABSTRACT This paper responds to the article by Biddle, Bowen, and Wallace (BBW) by suggesting that their study of EVA and earnings has three potential shortcomings: 1999 Morgan Stanley.
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Social Science Research Network, 2011
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Social Science Research Network, Jul 6, 2015
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Journal of Corporate Accounting & Finance, 1991
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Journal of Applied Corporate Finance, Sep 1, 2019
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Journal of Applied Corporate Finance, Mar 1, 2014
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Journal of Applied Corporate Finance, Sep 1, 2016
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Compensation & Benefits Review, Apr 1, 1990
The role of investor expectations in setting stock prices makes shareholder return a poor measure... more The role of investor expectations in setting stock prices makes shareholder return a poor measure of management performance.
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Journal of Applied Corporate Finance, Mar 1, 1996
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Journal of Applied Corporate Finance, Aug 20, 2020
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Social Science Research Network, Nov 14, 1998
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Journal of Applied Corporate Finance, Mar 1, 2006
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Journal of Applied Corporate Finance, Sep 1, 2005
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Journal of Applied Corporate Finance, Mar 1, 2006
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Papers by Stephen O'Byrne