Cause & Effect of Sept. 11th Essay Example | Topics and Well Written Essays - 1500 words

Cause & Effect of Sept. 11th - Essay Example The social effect is captured by the way the catastrophe altered the American people’s perception, behavior and interaction towards Muslims living within and outside the country. The political effect is manifested by the labeling of certain states as the axis of evil and the American-led invasions of Iraq and Afghanistan. The economic effect can be seen from the increased use of resources to secure production, distribution, finance, and communication at the expense of national productivity. What caused the September 11 attacks? In retrospect the big question still is: what led to 9/11 in the first place? There is no clear answer to this question; however, numerous conjectures have been raised. Even the US government’s 9/11 commission failed to provide clarity on the real causes of September 11. The commission only gave an unqualified response on who was responsible for the heinous act. There is not a single event in modern times that has elicited as many explanations as this tragedy. According to Bergen (2006) the theories on the causes of the September 11 attacks could be categorized into three: (1) the outright absurd, which state that the attacks were orchestrated by the US government; (2) the believable but flawed that argue that the attacks were done as a response to foreign occupation in the Arab lands; and (3) the credible, which postulates that September 11 was simply a collateral damage resulting from a clash within Islam. The al Qaeda angle In its findings, the US 9/11 commission concluded that the al Qaeda was solely responsible for the terrorist attacks. Osama Bin Laden was at war unambiguously with the United States. Levingston (2010) argued that this was the case because Osama was irked by the multiple engagements of the US in the Arab lands and its unequivocal support for Israel. This theory fits the second categorization of Bergen (2006); the-believable-but-flawed argument. At this juncture, it is important to note that Osama ’s critique towards America had never been cultural. Osama was not fighting Western culture; his was a personal war against the US. Bergen (2006) stated that Bin Laden was astute enough to know that he could not wage an all-out battle against the world’s sole superpower. He therefore craftily embodied his vision inside al Qaeda and attracted similar disgruntled Islamists whom he managed to convince that America was the enemy. Osama saw terrorism as the only achievable mode of operation to wage war against the US. This argument is believable but flawed because it fails to provide sufficient reasons as to why an individual in the Middle East would be so obsessed with waging a war against the US. Western interference The second plausible root cause of al Qaeda’s attack was perpetual Western interference in the oil-rich Persian Gulf. This interference can be traced back to colonization of Arab states by France and Britain, the creation and unequivocal support for the Jewish state – Israel, and currently American hegemony that is exemplified by acts such as the Gulf War in 1990. Western interference is a broader cause than Osama’s war in that it does not merely point the finger at one Western state – America – but at the entire Western world. The heart of this argument on Western interference is that the West has slowly and steadily been eroding the Arab culture by permeating Western ideologies in the Persian

Guest speaker paper Movie Review Example | Topics and Well Written Essays - 500 words

Guest speaker paper - Movie Review Example The presentation seems to cover the fundamental aspects of marketing and their relevance in the hospitality industry. Incorporation of the modern advancement in information technology is highlighted by the guest speaker as instrumental in determining the success of hospitality industry. Marketing must therefore include comprehensive consumer feedback systems. This would help the hospitality company to make necessary adjustments and fill the demand gap which will go a long way in boosting the image of the firm. The speaker focusses on the need to adopt new hospitality and travel marketing management practices in order to remain relevant in the market (Nykiel,2012). Positioning is pointed out as a critical tool in enhancing the positive outcome in any marketing endeavors. This would be achieved through in-depth analysis of market trend and emerging consumer behavior. Market segmentation and 8Ps are explored by the speaker as they are considered core in boosting the overall set goals. E mbracing diverse cultural background of the hospitality consumer community is a strong variable when it comes to attaining customer satisfaction. The presentation has exhausted the expected marketing plan strategies and its impact in determining the success of an existing company or potential entrant. The speaker’s contribution in hospitality marketing offers an insight into the underlying concepts in organization success. Management practices and flexibility to emerging changes remains key in achieving short and long term goals. It is worth to note that intensifying competition in the hospitality industry calls for sound marketing plan. The plan must accommodate changes as market trend evaluation takes course. Hospitality and travel industry has experienced significant changes due to the influence of globalization (Nykiel, 2012). In essence, I believe the speaker’s ideas would be helpful in understanding the marketing management transition

An experiment to see if interference affects recall in short-term memory Essay Example for Free

An experiment to see if interference affects recall in short-term memory Essay Each participant must carry out the experiment under the same conditions. This included keeping the setting the same, making sure no extraneous variables such as external noise, can disrupt it. However, because it is an independent groups design there may have been participant variables confounding the results. These are individual differences between the participants; for example, the emotional state of an individual or whether the memory of an individual is better than another. Psychology students may have an advantage over non-psychology students because they already have an insight into the same or similar types of experiments. It is an independent groups design because two separate groups of participants are being tested. One group receives the experimental treatment, which in this case, is the interference task. The other group receives no treatment, acting as a control group. Both groups are tested once and their results are compared. The controls in the experiment that need to be kept the same for each participant is the setting, making sure there is no extraneous variables such as any external noise. The actual objects and time period for looking at and rehearsing the objects with and without interference must be the same. The books used in the interference task should also be the same for each participant. The participants will be debriefed after the experiment and will be asked for their consent before. They are also told that they have the right to withdraw at any time during the experiment. The confidentiality of the experiment is important. The results of the participants are not revealed to anyone. The results obtained are only kept if informed consent is received. Participants The participants chosen for the experiment are in the age range of 16-18 years. The target population is students who attend sixth form. They include psychology and non-psychology students, and they are chosen by opportunity sampling. This sampling was used because it is the most practical in the circumstances. It is a quick and easy way of choosing participants, and this was important for this study because it was carried out in school hours, when students had lessons to go to and therefore students were chosen if they were available at the time. The number of participants chosen was 20 and the ratio of girls to boys was 9:11. The ratio of psychology to non-psychology students was 7:13. Apparatus The apparatus in the experiment includes: Three tables, one with 12 objects on, which include a skull, football boots, board pen, spectacles, fork, mobile phone, can of coke, car keys, screw driver, school tie, watch and a chocolate bar. Opportunity sampling was used to choose these 12 objects found around the school and at home, finding any type of object of similar sizes to fit on a table, suitable to use in a school environment. This type of sampling enabled the objects to be varied and not just from one particular environment, preventing schemas to make recall easier.

Executive Compensation and Stock Option in the UK

Executive Compensation and Stock Option in the UK 1 Introduction Todays highly competitive world consists of numerous corporations and these corporations are so huge and so large that it cannot be controlled by the people who own them. The control of these corporations is separated from shareholders who are the owners and vested into the hands of professional executives who are specifically hired for its management. This separation of ownership and control gave rise to agency problem or the principal-agent problem. Principal is referred to the stockholders and the agents are the executives who work for the stockholders. Although stockholders are the owners of the company to whom the executives are accountable, their actual powers are restricted except in the case of those corporations where stockholders are also the directors of that corporation. Stockholders have no right to inspect the books of accounts nor are they aware of the exact functioning and position of the firm. As a result, executives tend to work inefficiently without even bothering to look for profitable new investment opportunities, as well as they may use the firms assets for private purposes and also work to achieve their personal goals all at the expense of the shareholders. Some managers do not take any action whatever state or condition the corporation may be as they are risk averse and fear the threat of losing their job if a decision taken by them goes wrong. Therefore in order to avoid the various problems that arise due to the agency problem, executives must be properly and promptly compensated along with proper monitoring. In the beginning of 1990s, debates on corporate governance mainly focused on directors remuneration and fat cats. Fat cats are referred to those executives who provided themselves with huge compensation packages without any performance criteria. In UK, the most famous Fat Cat episode which saddened the shareholders of many large public companies and dragged the attention of the media was the notorious British Gas incident of the mid 1990s. Various issues arising out of executive compensation and the trouble of framing the deserved level of compensation, that has to be provided to an executive, made executive remuneration a main area of concern under corporate governance. According to Jensen (1993), providing the right level of remuneration to the executives and creating positive incentives in order to achieve the interest of the shareholders has been an important study conducted in many academic literatures. An improvement in corporate governance is brought about by filtering certain aspects of executive remuneration. There exists a wide gap between the remuneration paid to the executives and the remuneration paid to the other employees on the company. This gap keeps on increasing year after year as executives demand more and more for their services and decision making process to boosts the productivity and reputation of the firm which thereby increases the market price of the companys share. In a research mentioned in the Higgs Report (2003), chairmen of FTSE 100 companies in 2003 earned an average of  £ 426,000 as remuneration. Moreover, executives are being rewarded with stock options which would enrich them with abnormal profits in the future when the options granted to them are exercised. Critics argue that, executives are not worth for the remuneration paid because of their poor and unsatisfactory performance. According to Blitz (2003), MORI a leading market research company in the UK, through a survey, found 78% of the people unsatisfied by the remuneration paid to the executives. The pu blic in UK believe that executives are being overpaid for the amount of work they actually do. 2 Methodology This paper is a critical review on the various aspects of executive compensation in the UK and how the executive compensation especially the executive stock option encourage the managers and top executives, for their personal benefit, to take short term high risks and boost up the current value of shares rather than looking into the future and acting in favour of the stakeholders of the company. The tools used for the research mainly consist of various literature reviews of past articles and current working papers with some analysis of some statistical data regarding executive compensation. On the basis of the above mentioned area of research certain questions have been framed which will be critically looked into: a) Brief description of the executive compensation and corporate governance in the UK. b) Basic structure of executive remuneration in the UK and their disclosure requirements in United Kingdom. c) Are stock options considered the best means of remuneration in an executive compensation package? d) A brief historical overview of the introduction of executive stock option in the UK. e) What are the various manipulations done with executive stock option and what are the risk incentives created by executive stock option? f) Brief comparison of the UK executive compensation with the US executive compensation. g) The role of executive compensation in the UK banking towards the current financial crises. 3 Executive Compensation and Corporate Governance in the United Kingdom: During the past decade, various issues on corporate governance established the emergence of many reports and codes of best practice in the United Kingdom. These include the Inland Revenue (1988), Cadbury Report (1992), Greenbury Report (1995), Hampel Report (1998), The Combined Code (1998), Hermes Statement on Corporate Governance and Voting Policy (1998), Internal Control: Guidance for Directors on the Combined Code (Turnbull Report)(1999), Company Law Reform (1999) and Financial Services Market Act (2001) (Konstantinos Stathopoulos, Susanne Espenlaub, Martin Walker, 2003). Among these reports the Cadbury Report, Greenbury Report and the Combined Code, which emerged from the Hampel Report, focused on issues regarding executive compensation. 3.1 Cadbury Report (1992): The first guidelines of good practice on various issues of corporate governance were provided in the year 1992 by the Cadbury Committee which was established in May 1991 and was chaired by Adrian Cadbury. The Cadbury Committee discussed issues that were broader in nature than the executive remuneration but certain suggestions the committee made on altering the executive pay was accepted as permanent. The Cadbury report was titled as the Financial Aspects of Corporate Governance and came out with the Code of Best Practice, which insisted that decisions based on executive remunerations should not be made by the executive directors nor they have to get involved in making such a decision (1992, paragraph 4.42 p. 31). The report therefore recommended the appointment of a remuneration committee which will act in the interest of the shareholders of the firm and express a good opinion on various matters regarding executive compensation to the board. Companies in the UK responded spontaneousl y to this recommendation made in the Cadbury Report and established a remuneration committee within the firm (Bostock, 1995). The remuneration committee consists of a non-executive director as the chairperson and non-executive directors as its members who are all independent and free from the influence of the management. According to Williamson (I985), there always arises a question of doubt whether the directors make remuneration contracts for their own huge benefits and sanction it, if an independent pay committee does not exist. The role of remuneration committee is to ensure that executive compensation levels are set up in a formal, transparent way along with the goals required to be achieved by the executives for any schemes that are performance related. The remuneration committee can take advice from outside sources whenever necessary. The Cadbury report also suggested the establishment of an audit committee within each company which comprises of three non-executive directors (Martin Conyon, Paul Gregg and Stephen Machin, 1995). According to a questionnaire survey conducted by Conyon and Mallin (1997), by 1995, 98% of the companies followed the suggestions made by the Cadbury report and has reported the involvement of the remuneration committee in their annual reports. 3.2 The Greenbury Report (1995): Cadbury report failed to provide detailed guidance on how compensation packages have to be structured. However, it pointed out executive compensation to be the main area of study for the next committee known as the Greenbury Committee. The Greenbury Committee chaired by Sir Richard Greenbury, was formed by the United Kingdom Confederation of Business and Industry, and in 1995 it submitted the Greenbury report which dealt with matters regarding the determination and accounting of top executive pay. The main issues discussed in the Greenbury Report includes the role of the remuneration committee in an organisation, the disclosure requirement required by the shareholders of the organisation, the remuneration policies for compensating the executives and the service contracts provided to the executives. The remuneration policies recommended in the Greenbury Report are: a) Compensation packages must be provided by the remuneration committee to quality executives in order to influence, sec ure and encourage them and any payments extra to this intention must be avoided (Greenbury Report Paragraphs 6.5 – 6.7). b) The payments made and the subsequent resulting performance by other companies in the same industry must be evaluated by the remuneration committee. On the basis of this evaluation, the remuneration committee should relatively place their company (Paragraphs 6.11 – 6.12). c) While making changes to the annual salary of the executives, the remuneration committee should look into the payment and employment situations in other areas of the company rather than only concentrating on the executive pay and increasing them so as to satisfy the executives (Paragraph 6.13). d) The part of remuneration that is related to performance should be designed in such a way that the executives incentives go hand in hand with the interest of the shareholders and the executives are motivated to perform their duties with high standards (Paragraph 6.16). e) The performan ce conditions for executives to avail their annual bonuses, if any, should be designed to support and widen the operations of the business. The maximum possible amount of annual bonus an executive can avail should be taken into consideration by the remuneration committee and in some cases a part of these bonus payments can also be made by shares (Paragraphs 6.19 – 6.22). f) Under the long term incentive scheme, the Greenbury Report suggested that the shares and options granted to the executives should neither vest nor be exercisable, at least for a period of 3 years after such grant. The remuneration committee should encourage its executives to keep possession of their shares, after its vesting or exercise, for a long period of time (Paragraphs 6.23 – 6.34). g) The present existing long term incentive scheme should either be replaced by the new incentive scheme proposed or, the new incentive scheme proposed when combined with the old existing scheme should formulate a well structured incentive plan. The remuneration committee should make sure that the new long term incentive plan does not pay in excess than what is actually required for the executives and this new plan is accepted by the shareholders (Paragraph 6.35). h) The criteria for any long term incentive grant should be challenging and the performance of the executives should help achieve the goals set by the company in order to stand out from rest of its competitors. Key variables like the total shareholders return are used to judge the performance of the company with respect to its competitors (Paragraphs 6.38 – 6.40). i) Executive stock option grant or any other long term incentive grant must not be presented in lump-sum but should be awarded in series of stages. Moreover, no discount should be provided to the executives on the issue of executive stock option (Paragraph 6.29). j) While increasing the annual basic salary of the executives, the remuneration committee should look in to the effect of such increase on the executives pension entitlement and on the future expenses of the company particularly in case of those executives who are nearing retirement. The annual bonuses paid or any benefits paid in kind are not entitled for any pension payment (Paragraph 6.42 – 6.45). The aim of the Greenbury Report was not to cut down the executives remuneration but was to establish a balance between the compensation paid to the executives and their respective performance. On publishing the report in 1995 by the Greenbury Committee, certain tax advantages that was permitted on newly issued share options which comes under the approved executive share option scheme was withdrawn by the UK government. A new type of option scheme was introduced in November 1995 which had an upper limit of only  £20,000 on individual option holdings. Further, executive share options whose exercise price was earlier accepted at a discounted price of 15% on the existing share price at the time of grant was prevented (Konstantinos Stathopoulos, Susanne Espenlaub Martin Walker, 2003). According to Conyon (1994) in UK, the top executive director of a company was also made member of its remuneration committee before the launch of the Greenbury Report. However, the old fashioned executive share options schemes was not benefitted from the recommendations made by the Greenbury Committee as it not only seized the tax benefits but also encouraged to substitute options with long term incentive plans which in the UK is just awarding shares and not cash. The recommendations made by the Greenbury Report were not widely accepted as many of the critics believed that the report failed to link the executive pay with the performance of the company. 3.3 The Combined Code (1998): The Combined Code of the London Stock Exchange controls the various remuneration practices adopted by the companies listed in the London Stock Exchange. It has combined the recommendations given by the Cadbury Report and the Greenbury Report in order to form a regulation for efficient remuneration practice. The annual report of the companies listed should contain in a separate section the remuneration policy adopted by the company. The Combined Code requires a statement, in the annual report, showing that the remuneration standards mentioned in the code are being followed by the company and if any set standard is not complied with, the statement should point out the reason for the non compliance. A high level of executive remuneration disclosure is also required under the combined code and clear explanations about the various compensation packages provided to each executive director and non executive director should be stated (Konstantinos Stathopoulos, Susanne Espenlaub Martin Walk er, 2003). 4 Structure of Executive Remuneration in the UK: The typical structure of executive compensation in UK comprise of base salary, annual bonus, share options and long term incentive plans along with certain additional components like restricted stock and retirement plans. In 1997, an average executive compensation package consisted of 54% of base salary, 24% of annual bonus and 22% of non cash items which include share options and long term incentive plans (Martin J. Conyon, Simon I. Peck, Laura E. Read and Graham V. Sadler, 2000). Base Salary Determination of the base salary of an executive is done by taking into consideration the base salaries paid to executives of other companies in the same industry through surveys and analysis. This system of setting up and providing base salary is known as competitive benchmarking. Certain modifications are carried out on the base salary depending on the size of the firm, thereby linking executive compensation and firm size. In UK, base salary form the major part of the total executive remuneration paid. Base salary is that component of executive remuneration which is fixed and do not vary according to the performance, experience, age, etc of the executives. A  £1 increase in the base salary is preferred by executives who are risk averse than a  £1 increase in other components of executive compensation that are variable. Annual Bonus Bonus is provided to the executives on the basis of their performance during the relevant financial year. It is provided on an annual basis and the amounts paid as bonus to each executive vary from year to year. The performance of the executives is generally measured by taking into consideration accounting numbers which can be cross checked and audited. Executives have a clear idea of their daily performance by looking at the accounting numbers and they can forecast how overall profit of the company is going to look like at the end of the year. The drawback of relying on accounting numbers for measuring performance is that it is fully under the control of the executives and if wanted executives can manipulate the accounts in order to increase their annual bonus entitlement. Share Options Share options are contracts provided to the executives that cannot be traded which gives the executives the right to buy the shares of the firm at a price that is pre-determined known as the exercisable price for a specified time period. These contracts become void and have to be surrendered if the exercisable period mentioned has elapsed or if the executive resigns from the company before the exercisable period. This component of executive compensation is looked more into detail in the later section. Long-Term Incentive Plans – Long-Term Incentive Plans are provided to the executives in order to motivate and compensate them for achieving long term performance for the company. Grant of shares is the most typical form of LTIPs provided in the UK. These shares are vested to the executives only on achieving the objectives set by the company that is related to future performance. Earnings per Share and Total Shareholders Return are the two main elements by which the performance of the company is measured in the UK. Retirement Plans – Apart from the basic pension plans provided by the company, in UK, executives are encouraged to participate in an additional retirement benefit plan. These plans are a major source of concern because it symbolises invisible compensation. The actual value of executive retirement plan cannot be calculated by the available information provided in the books of accounts and the annual report. 4.1 Disclosure Requirement of Executives Remuneration in the UK: The Greenbury Report in 1995 identified three fundamental principles, which are accountability, transparency and performance linkage, in respect to executives remuneration. In UK, the current best practice disclosure pattern failed to compile with these fundamental principles therefore the government introduced certain necessary additions to the existing disclosure pattern. These latest requirements regarding disclosure of UK executives remuneration unifies the existing law, regulation and best practices that are mentioned in the UK Companies Act of 1985, the UK Listing Rules and the UK Combined Code of Principles of Good Governance and Code of Best Practice. The new requirement requires every company in the UK to adopt and prepare the directors remuneration report along with other necessary requirements. 4.1.1 Directors Remuneration Report (DRR): Companies listed in the London Stock Exchange should prepare the directors remuneration report for every financial year (Section 234B Companies Act) and should publish this report along with the accounts and annual report of the company (Section 244 Companies Act). The preparation of the remuneration report is done by the board of directors and not by the remuneration committee being, a committee accountable and responsible to the board and consisting only the non executive directors of the company. The remuneration of both the executive and non executive directors is clearly mentioned in the remuneration report. The fully prepared remuneration report should be filed with the registrar of companies (Section 242 Companies Act) and made available and provided to all the parties interested in the company such as the shareholders, debenture holders, and other persons who are required to attend the general meetings (Section 238 Companies Act). The remuneration report should contain all the information regarding the remuneration of the directors for the financial year completed i.e. the relevant financial year which includes disclosure of the amount receivable by the directors, whether paid or not, during the financial year as well as the disclosure of any amount paid as directors remuneration for any other period during the financial year (Companies Act, Schedule 7A, paragraph 19). The remuneration report should include the payments made to a third party for any services provided to the directors (Companies Act, Schedule 7A, paragraph 18(3)) and a statement showing the future remuneration policy of the directors. In UK, only the disclosure of directors remuneration is needed in the remuneration report. The name and information of every person who is the director, during the relevant financial year, has to be mentioned in the remuneration report. The remuneration report contains information that has to be audited by an external auditor (Companies Act, Schedule 7A, Part 3) and information need not be audited (Companies Act, Schedule 7A, Part 3). a) Information in DRR subject to audit: With regards to information subject to audit, the external auditor in his own consent should mention whether the information provided are prepared according to the necessary requirement and if any information is not complied as needed, the auditor should provide a statement showing them (Sections 235 and 237 Companies Act). The auditor will also look into disclosure information that are not subjected to audit and verify them with the company accounts as well as with the disclosure information that are audited. The various information included in the DRR that are subject to audit are: Emoluments and compensation For the services provided to the company as an executive or for any other services relating to the companys management, the salary, bonus, fees or compensation as termination of qualifying services received or receivable by the executives should be disclosed in the DRR. The overall value of non monetary benefits provided to the executives should be mentioned and the total aggregate of each kind of executive compensation provided in the relevant financial year should be compared with the previous financial year (Companies Act, Schedule 7A, paragraph 6). Share Options – The different types of shares options a company have should be mentioned along with their terms and conditions and besides each share option the total option each executive hold in the beginning of the relevant financial year as well as in the end should be disclosed. Detailed information of the various options provided during the year, its date of grant, its exercise price, date of expiry, number that have become void and number exercised and unexercised by the executives should be mentioned. If the share options are subject to any performance condition then the criteria has to be clearly described. For those shares that have been exercised, the market price during the time of exercise and for those shares unexercised ,the highest, lowest and the year end market prices have to be also mentioned. Since the disclosure of share options is a lengthy process, the aggregate of options each director hold is stated and the disclosure can be made on the basis of weighted average exercise pri ces (Companies Act, Schedule 7A, paragraphs 7-9). Long-term incentive schemes – Disclosure of scheme interests at the beginning and end of the current financial year which each executive hold must be made. Details of the type of scheme interest provided to the executives, its value and when it is vested in the year should be mentioned. If there are any conditions on the basis of which scheme interests will be granted then the relevant conditions should be specified (Companies Act, Schedule 7A, paragraphs 10 and 11). Other Information Details of executives pension scheme transfer value, any benefits that are accumulated over time and amount paid or payable by the company towards the money purchase pension scheme and retirement benefit scheme should be mentioned (Companies Act, Schedule 7A, paragraph 12). Amount received or receivable by the executives as benefits over and above the retirement benefit which he is entitled after 31st March 1997 should be included in the DRR (Companies Act, Schedule 7A, paragraph 13). If any person, who was once the executive of the company, has been given a special reward or if any third party is paid for their services provided to the executives during the relevant financial year it should be stated and disclosed (Companies Act, Schedule 7A, paragraph 14 15). b) Information in DRR not subject to audit: The information in the DRR that are not subject to audit is: Remuneration Committee – If any decision regarding the remuneration of the executives is taken by a committee during the financial year then the DRR must contain the name of all the non executive directors who were the members of such a committee and also should mention the name of any other person who is not the member of the committee but has been appointed by the members to assist them with certain services and advice. The details of the services rendered by the outside party should be clearly mentioned and this is done to ensure that the executive director play no role and influence the decision making of the committee (Companies Act, Schedule 7A, paragraph 2). Statement of policy on executives remuneration – A statement of future policy on executives remuneration for the coming financial years has to be included in the directors remuneration report (Companies Act, Schedule 7A, paragraph 3). The statement of policy should therefore disclose the conditions of performance, by an executive, for the entitlement of share option and long term incentive scheme along with the reasons for setting up such performance condition and the method used to assess the performance condition. If any executive fails meet the performance condition and does not benefit from the stock option grant or long term incentive scheme, the report should clearly state the conditions that are unsatisfactory. Details of the company on the basis of which the performance is measured should be provided in the report. Changes or amendments proposed to the existing terms and conditions for executives entitlement should be highlighted. Explanation should also provide for non-performance related remuneration and company policies on executives service contracts. This statement covers all directors from the end of the current financial year till the time when the report is put for voting by the shareholders of the company Performance graph – Publication of preceding 5 years performance graph should be included in the DRR showing the total shareholder return for holding shares whose listing transformed the company into a quoted company and for holding shares on the basis of which calculations are made for a broad equity market index. A fair method is used for the calculation of the total shareholder return along with various assumptions like the interest received on shares being reinvested (Companies Act, Schedule 7A, paragraph 4). Service Contract – During the relevant financial year if any executive is provided with a service contract, the date at which the service contract has been provided, its duration and its terms and conditions should be mentioned in the remuneration report. A detail of the termination compensation the executive is entitled to receive along with the companys liability on early termination is to be included (Companies Act, Schedule 7A, paragraph 5). On the complete preparation of the remuneration report, in the annual general body meeting it is introduced and called for a vote by the shareholders of the company (Section 241A Companies Act). This concept of voting the remuneration report was a controversial topic as many commentators suggested the voting to be limited to only the remuneration policy rather than the whole remuneration report. The reason they point out is that the executives remuneration policies are futuristic in nature so the shareholders can express their opinion on the policies adopted ra ther than making aware of the actual remuneration paid to each individual director. 4.1.2 Other Requirements: a) Along with the preparation of the DRR, disclosure of the aggregate compensation of the executive, loan given to the executives and other company transactions with the executive should be done in the notes of the annual accounts as mentioned in Schedule 6 of the Companies Act. b) As per Section 251 of the Companies Act and Companies Regulations (1995), listed companies in their summary financial statements should as a statement, state its policies regarding the remuneration of executives and the companys performance graph. 5 Stock/Share Options – Are they the Best in an Executive Compensation package? The most prominent and important component of executive compensation, in order to merge the interests of the executives with that of the interests of the shareholders, is providing the executives with stock options in the firms they serve (Jensen and Meckling, 1976). According to Jeffrey A. Williamson and Brian H. Kleiner, A stock option is a security that represents the right, but not the obligation, to buy or sell a specified amount of stocks at a specified price within a specified period of time. Stock options granted to executives of many large multinational firms are much higher in value than the annual cash pay they are entitled to be paid which in-turn boosts up the overall total compensation provided to the executives. This makes stock options the single largest ingredient in the current scenario of executive compensation. In the United States itself, stock options are held by more than 10 million employees (Simon R. and Dugan J., 2001) out of which around 160,000 of them tur ned out to be millionaires (Tate E.A. and Wilson T.E., 2001). Initially stock options were provided as a bonus to all the key executives of a company, but during the recent years its use is restricted only to the top level management. Providing stock options have resulted in increased productivity of the organisations. Executives are aware that their gain is linked with the stock performance of the organisation therefore they strive harder and work more efficiently to achieve progress. The main objective behind granting stock options is to make sure that executive make a profit on the success of the companys operations and in case of failures they suffer. Hence executive stock options link pay to performance. Critics argue to provide shares of stock rather than providing stock options in order to link pay and performance. The value of a stock option is only one third the value of a share, in case of companies having an average volatile stock price and yielding an average dividend the reason being stockholders receiving the whole value along with the dividend payment and the option holders benefitting only from the additional returns that is over and above the exercise price. This implies that options have a greater leverage and at the same cost, a company can provide its executives with options that are three times as much as that of shares. Stock options are incentive plans that are future Executive Compensation and Stock Option in the UK Executive Compensation and Stock Option in the UK 1 Introduction Todays highly competitive world consists of numerous corporations and these corporations are so huge and so large that it cannot be controlled by the people who own them. The control of these corporations is separated from shareholders who are the owners and vested into the hands of professional executives who are specifically hired for its management. This separation of ownership and control gave rise to agency problem or the principal-agent problem. Principal is referred to the stockholders and the agents are the executives who work for the stockholders. Although stockholders are the owners of the company to whom the executives are accountable, their actual powers are restricted except in the case of those corporations where stockholders are also the directors of that corporation. Stockholders have no right to inspect the books of accounts nor are they aware of the exact functioning and position of the firm. As a result, executives tend to work inefficiently without even bothering to look for profitable new investment opportunities, as well as they may use the firms assets for private purposes and also work to achieve their personal goals all at the expense of the shareholders. Some managers do not take any action whatever state or condition the corporation may be as they are risk averse and fear the threat of losing their job if a decision taken by them goes wrong. Therefore in order to avoid the various problems that arise due to the agency problem, executives must be properly and promptly compensated along with proper monitoring. In the beginning of 1990s, debates on corporate governance mainly focused on directors remuneration and fat cats. Fat cats are referred to those executives who provided themselves with huge compensation packages without any performance criteria. In UK, the most famous Fat Cat episode which saddened the shareholders of many large public companies and dragged the attention of the media was the notorious British Gas incident of the mid 1990s. Various issues arising out of executive compensation and the trouble of framing the deserved level of compensation, that has to be provided to an executive, made executive remuneration a main area of concern under corporate governance. According to Jensen (1993), providing the right level of remuneration to the executives and creating positive incentives in order to achieve the interest of the shareholders has been an important study conducted in many academic literatures. An improvement in corporate governance is brought about by filtering certain aspects of executive remuneration. There exists a wide gap between the remuneration paid to the executives and the remuneration paid to the other employees on the company. This gap keeps on increasing year after year as executives demand more and more for their services and decision making process to boosts the productivity and reputation of the firm which thereby increases the market price of the companys share. In a research mentioned in the Higgs Report (2003), chairmen of FTSE 100 companies in 2003 earned an average of  £ 426,000 as remuneration. Moreover, executives are being rewarded with stock options which would enrich them with abnormal profits in the future when the options granted to them are exercised. Critics argue that, executives are not worth for the remuneration paid because of their poor and unsatisfactory performance. According to Blitz (2003), MORI a leading market research company in the UK, through a survey, found 78% of the people unsatisfied by the remuneration paid to the executives. The pu blic in UK believe that executives are being overpaid for the amount of work they actually do. 2 Methodology This paper is a critical review on the various aspects of executive compensation in the UK and how the executive compensation especially the executive stock option encourage the managers and top executives, for their personal benefit, to take short term high risks and boost up the current value of shares rather than looking into the future and acting in favour of the stakeholders of the company. The tools used for the research mainly consist of various literature reviews of past articles and current working papers with some analysis of some statistical data regarding executive compensation. On the basis of the above mentioned area of research certain questions have been framed which will be critically looked into: a) Brief description of the executive compensation and corporate governance in the UK. b) Basic structure of executive remuneration in the UK and their disclosure requirements in United Kingdom. c) Are stock options considered the best means of remuneration in an executive compensation package? d) A brief historical overview of the introduction of executive stock option in the UK. e) What are the various manipulations done with executive stock option and what are the risk incentives created by executive stock option? f) Brief comparison of the UK executive compensation with the US executive compensation. g) The role of executive compensation in the UK banking towards the current financial crises. 3 Executive Compensation and Corporate Governance in the United Kingdom: During the past decade, various issues on corporate governance established the emergence of many reports and codes of best practice in the United Kingdom. These include the Inland Revenue (1988), Cadbury Report (1992), Greenbury Report (1995), Hampel Report (1998), The Combined Code (1998), Hermes Statement on Corporate Governance and Voting Policy (1998), Internal Control: Guidance for Directors on the Combined Code (Turnbull Report)(1999), Company Law Reform (1999) and Financial Services Market Act (2001) (Konstantinos Stathopoulos, Susanne Espenlaub, Martin Walker, 2003). Among these reports the Cadbury Report, Greenbury Report and the Combined Code, which emerged from the Hampel Report, focused on issues regarding executive compensation. 3.1 Cadbury Report (1992): The first guidelines of good practice on various issues of corporate governance were provided in the year 1992 by the Cadbury Committee which was established in May 1991 and was chaired by Adrian Cadbury. The Cadbury Committee discussed issues that were broader in nature than the executive remuneration but certain suggestions the committee made on altering the executive pay was accepted as permanent. The Cadbury report was titled as the Financial Aspects of Corporate Governance and came out with the Code of Best Practice, which insisted that decisions based on executive remunerations should not be made by the executive directors nor they have to get involved in making such a decision (1992, paragraph 4.42 p. 31). The report therefore recommended the appointment of a remuneration committee which will act in the interest of the shareholders of the firm and express a good opinion on various matters regarding executive compensation to the board. Companies in the UK responded spontaneousl y to this recommendation made in the Cadbury Report and established a remuneration committee within the firm (Bostock, 1995). The remuneration committee consists of a non-executive director as the chairperson and non-executive directors as its members who are all independent and free from the influence of the management. According to Williamson (I985), there always arises a question of doubt whether the directors make remuneration contracts for their own huge benefits and sanction it, if an independent pay committee does not exist. The role of remuneration committee is to ensure that executive compensation levels are set up in a formal, transparent way along with the goals required to be achieved by the executives for any schemes that are performance related. The remuneration committee can take advice from outside sources whenever necessary. The Cadbury report also suggested the establishment of an audit committee within each company which comprises of three non-executive directors (Martin Conyon, Paul Gregg and Stephen Machin, 1995). According to a questionnaire survey conducted by Conyon and Mallin (1997), by 1995, 98% of the companies followed the suggestions made by the Cadbury report and has reported the involvement of the remuneration committee in their annual reports. 3.2 The Greenbury Report (1995): Cadbury report failed to provide detailed guidance on how compensation packages have to be structured. However, it pointed out executive compensation to be the main area of study for the next committee known as the Greenbury Committee. The Greenbury Committee chaired by Sir Richard Greenbury, was formed by the United Kingdom Confederation of Business and Industry, and in 1995 it submitted the Greenbury report which dealt with matters regarding the determination and accounting of top executive pay. The main issues discussed in the Greenbury Report includes the role of the remuneration committee in an organisation, the disclosure requirement required by the shareholders of the organisation, the remuneration policies for compensating the executives and the service contracts provided to the executives. The remuneration policies recommended in the Greenbury Report are: a) Compensation packages must be provided by the remuneration committee to quality executives in order to influence, sec ure and encourage them and any payments extra to this intention must be avoided (Greenbury Report Paragraphs 6.5 – 6.7). b) The payments made and the subsequent resulting performance by other companies in the same industry must be evaluated by the remuneration committee. On the basis of this evaluation, the remuneration committee should relatively place their company (Paragraphs 6.11 – 6.12). c) While making changes to the annual salary of the executives, the remuneration committee should look into the payment and employment situations in other areas of the company rather than only concentrating on the executive pay and increasing them so as to satisfy the executives (Paragraph 6.13). d) The part of remuneration that is related to performance should be designed in such a way that the executives incentives go hand in hand with the interest of the shareholders and the executives are motivated to perform their duties with high standards (Paragraph 6.16). e) The performan ce conditions for executives to avail their annual bonuses, if any, should be designed to support and widen the operations of the business. The maximum possible amount of annual bonus an executive can avail should be taken into consideration by the remuneration committee and in some cases a part of these bonus payments can also be made by shares (Paragraphs 6.19 – 6.22). f) Under the long term incentive scheme, the Greenbury Report suggested that the shares and options granted to the executives should neither vest nor be exercisable, at least for a period of 3 years after such grant. The remuneration committee should encourage its executives to keep possession of their shares, after its vesting or exercise, for a long period of time (Paragraphs 6.23 – 6.34). g) The present existing long term incentive scheme should either be replaced by the new incentive scheme proposed or, the new incentive scheme proposed when combined with the old existing scheme should formulate a well structured incentive plan. The remuneration committee should make sure that the new long term incentive plan does not pay in excess than what is actually required for the executives and this new plan is accepted by the shareholders (Paragraph 6.35). h) The criteria for any long term incentive grant should be challenging and the performance of the executives should help achieve the goals set by the company in order to stand out from rest of its competitors. Key variables like the total shareholders return are used to judge the performance of the company with respect to its competitors (Paragraphs 6.38 – 6.40). i) Executive stock option grant or any other long term incentive grant must not be presented in lump-sum but should be awarded in series of stages. Moreover, no discount should be provided to the executives on the issue of executive stock option (Paragraph 6.29). j) While increasing the annual basic salary of the executives, the remuneration committee should look in to the effect of such increase on the executives pension entitlement and on the future expenses of the company particularly in case of those executives who are nearing retirement. The annual bonuses paid or any benefits paid in kind are not entitled for any pension payment (Paragraph 6.42 – 6.45). The aim of the Greenbury Report was not to cut down the executives remuneration but was to establish a balance between the compensation paid to the executives and their respective performance. On publishing the report in 1995 by the Greenbury Committee, certain tax advantages that was permitted on newly issued share options which comes under the approved executive share option scheme was withdrawn by the UK government. A new type of option scheme was introduced in November 1995 which had an upper limit of only  £20,000 on individual option holdings. Further, executive share options whose exercise price was earlier accepted at a discounted price of 15% on the existing share price at the time of grant was prevented (Konstantinos Stathopoulos, Susanne Espenlaub Martin Walker, 2003). According to Conyon (1994) in UK, the top executive director of a company was also made member of its remuneration committee before the launch of the Greenbury Report. However, the old fashioned executive share options schemes was not benefitted from the recommendations made by the Greenbury Committee as it not only seized the tax benefits but also encouraged to substitute options with long term incentive plans which in the UK is just awarding shares and not cash. The recommendations made by the Greenbury Report were not widely accepted as many of the critics believed that the report failed to link the executive pay with the performance of the company. 3.3 The Combined Code (1998): The Combined Code of the London Stock Exchange controls the various remuneration practices adopted by the companies listed in the London Stock Exchange. It has combined the recommendations given by the Cadbury Report and the Greenbury Report in order to form a regulation for efficient remuneration practice. The annual report of the companies listed should contain in a separate section the remuneration policy adopted by the company. The Combined Code requires a statement, in the annual report, showing that the remuneration standards mentioned in the code are being followed by the company and if any set standard is not complied with, the statement should point out the reason for the non compliance. A high level of executive remuneration disclosure is also required under the combined code and clear explanations about the various compensation packages provided to each executive director and non executive director should be stated (Konstantinos Stathopoulos, Susanne Espenlaub Martin Walk er, 2003). 4 Structure of Executive Remuneration in the UK: The typical structure of executive compensation in UK comprise of base salary, annual bonus, share options and long term incentive plans along with certain additional components like restricted stock and retirement plans. In 1997, an average executive compensation package consisted of 54% of base salary, 24% of annual bonus and 22% of non cash items which include share options and long term incentive plans (Martin J. Conyon, Simon I. Peck, Laura E. Read and Graham V. Sadler, 2000). Base Salary Determination of the base salary of an executive is done by taking into consideration the base salaries paid to executives of other companies in the same industry through surveys and analysis. This system of setting up and providing base salary is known as competitive benchmarking. Certain modifications are carried out on the base salary depending on the size of the firm, thereby linking executive compensation and firm size. In UK, base salary form the major part of the total executive remuneration paid. Base salary is that component of executive remuneration which is fixed and do not vary according to the performance, experience, age, etc of the executives. A  £1 increase in the base salary is preferred by executives who are risk averse than a  £1 increase in other components of executive compensation that are variable. Annual Bonus Bonus is provided to the executives on the basis of their performance during the relevant financial year. It is provided on an annual basis and the amounts paid as bonus to each executive vary from year to year. The performance of the executives is generally measured by taking into consideration accounting numbers which can be cross checked and audited. Executives have a clear idea of their daily performance by looking at the accounting numbers and they can forecast how overall profit of the company is going to look like at the end of the year. The drawback of relying on accounting numbers for measuring performance is that it is fully under the control of the executives and if wanted executives can manipulate the accounts in order to increase their annual bonus entitlement. Share Options Share options are contracts provided to the executives that cannot be traded which gives the executives the right to buy the shares of the firm at a price that is pre-determined known as the exercisable price for a specified time period. These contracts become void and have to be surrendered if the exercisable period mentioned has elapsed or if the executive resigns from the company before the exercisable period. This component of executive compensation is looked more into detail in the later section. Long-Term Incentive Plans – Long-Term Incentive Plans are provided to the executives in order to motivate and compensate them for achieving long term performance for the company. Grant of shares is the most typical form of LTIPs provided in the UK. These shares are vested to the executives only on achieving the objectives set by the company that is related to future performance. Earnings per Share and Total Shareholders Return are the two main elements by which the performance of the company is measured in the UK. Retirement Plans – Apart from the basic pension plans provided by the company, in UK, executives are encouraged to participate in an additional retirement benefit plan. These plans are a major source of concern because it symbolises invisible compensation. The actual value of executive retirement plan cannot be calculated by the available information provided in the books of accounts and the annual report. 4.1 Disclosure Requirement of Executives Remuneration in the UK: The Greenbury Report in 1995 identified three fundamental principles, which are accountability, transparency and performance linkage, in respect to executives remuneration. In UK, the current best practice disclosure pattern failed to compile with these fundamental principles therefore the government introduced certain necessary additions to the existing disclosure pattern. These latest requirements regarding disclosure of UK executives remuneration unifies the existing law, regulation and best practices that are mentioned in the UK Companies Act of 1985, the UK Listing Rules and the UK Combined Code of Principles of Good Governance and Code of Best Practice. The new requirement requires every company in the UK to adopt and prepare the directors remuneration report along with other necessary requirements. 4.1.1 Directors Remuneration Report (DRR): Companies listed in the London Stock Exchange should prepare the directors remuneration report for every financial year (Section 234B Companies Act) and should publish this report along with the accounts and annual report of the company (Section 244 Companies Act). The preparation of the remuneration report is done by the board of directors and not by the remuneration committee being, a committee accountable and responsible to the board and consisting only the non executive directors of the company. The remuneration of both the executive and non executive directors is clearly mentioned in the remuneration report. The fully prepared remuneration report should be filed with the registrar of companies (Section 242 Companies Act) and made available and provided to all the parties interested in the company such as the shareholders, debenture holders, and other persons who are required to attend the general meetings (Section 238 Companies Act). The remuneration report should contain all the information regarding the remuneration of the directors for the financial year completed i.e. the relevant financial year which includes disclosure of the amount receivable by the directors, whether paid or not, during the financial year as well as the disclosure of any amount paid as directors remuneration for any other period during the financial year (Companies Act, Schedule 7A, paragraph 19). The remuneration report should include the payments made to a third party for any services provided to the directors (Companies Act, Schedule 7A, paragraph 18(3)) and a statement showing the future remuneration policy of the directors. In UK, only the disclosure of directors remuneration is needed in the remuneration report. The name and information of every person who is the director, during the relevant financial year, has to be mentioned in the remuneration report. The remuneration report contains information that has to be audited by an external auditor (Companies Act, Schedule 7A, Part 3) and information need not be audited (Companies Act, Schedule 7A, Part 3). a) Information in DRR subject to audit: With regards to information subject to audit, the external auditor in his own consent should mention whether the information provided are prepared according to the necessary requirement and if any information is not complied as needed, the auditor should provide a statement showing them (Sections 235 and 237 Companies Act). The auditor will also look into disclosure information that are not subjected to audit and verify them with the company accounts as well as with the disclosure information that are audited. The various information included in the DRR that are subject to audit are: Emoluments and compensation For the services provided to the company as an executive or for any other services relating to the companys management, the salary, bonus, fees or compensation as termination of qualifying services received or receivable by the executives should be disclosed in the DRR. The overall value of non monetary benefits provided to the executives should be mentioned and the total aggregate of each kind of executive compensation provided in the relevant financial year should be compared with the previous financial year (Companies Act, Schedule 7A, paragraph 6). Share Options – The different types of shares options a company have should be mentioned along with their terms and conditions and besides each share option the total option each executive hold in the beginning of the relevant financial year as well as in the end should be disclosed. Detailed information of the various options provided during the year, its date of grant, its exercise price, date of expiry, number that have become void and number exercised and unexercised by the executives should be mentioned. If the share options are subject to any performance condition then the criteria has to be clearly described. For those shares that have been exercised, the market price during the time of exercise and for those shares unexercised ,the highest, lowest and the year end market prices have to be also mentioned. Since the disclosure of share options is a lengthy process, the aggregate of options each director hold is stated and the disclosure can be made on the basis of weighted average exercise pri ces (Companies Act, Schedule 7A, paragraphs 7-9). Long-term incentive schemes – Disclosure of scheme interests at the beginning and end of the current financial year which each executive hold must be made. Details of the type of scheme interest provided to the executives, its value and when it is vested in the year should be mentioned. If there are any conditions on the basis of which scheme interests will be granted then the relevant conditions should be specified (Companies Act, Schedule 7A, paragraphs 10 and 11). Other Information Details of executives pension scheme transfer value, any benefits that are accumulated over time and amount paid or payable by the company towards the money purchase pension scheme and retirement benefit scheme should be mentioned (Companies Act, Schedule 7A, paragraph 12). Amount received or receivable by the executives as benefits over and above the retirement benefit which he is entitled after 31st March 1997 should be included in the DRR (Companies Act, Schedule 7A, paragraph 13). If any person, who was once the executive of the company, has been given a special reward or if any third party is paid for their services provided to the executives during the relevant financial year it should be stated and disclosed (Companies Act, Schedule 7A, paragraph 14 15). b) Information in DRR not subject to audit: The information in the DRR that are not subject to audit is: Remuneration Committee – If any decision regarding the remuneration of the executives is taken by a committee during the financial year then the DRR must contain the name of all the non executive directors who were the members of such a committee and also should mention the name of any other person who is not the member of the committee but has been appointed by the members to assist them with certain services and advice. The details of the services rendered by the outside party should be clearly mentioned and this is done to ensure that the executive director play no role and influence the decision making of the committee (Companies Act, Schedule 7A, paragraph 2). Statement of policy on executives remuneration – A statement of future policy on executives remuneration for the coming financial years has to be included in the directors remuneration report (Companies Act, Schedule 7A, paragraph 3). The statement of policy should therefore disclose the conditions of performance, by an executive, for the entitlement of share option and long term incentive scheme along with the reasons for setting up such performance condition and the method used to assess the performance condition. If any executive fails meet the performance condition and does not benefit from the stock option grant or long term incentive scheme, the report should clearly state the conditions that are unsatisfactory. Details of the company on the basis of which the performance is measured should be provided in the report. Changes or amendments proposed to the existing terms and conditions for executives entitlement should be highlighted. Explanation should also provide for non-performance related remuneration and company policies on executives service contracts. This statement covers all directors from the end of the current financial year till the time when the report is put for voting by the shareholders of the company Performance graph – Publication of preceding 5 years performance graph should be included in the DRR showing the total shareholder return for holding shares whose listing transformed the company into a quoted company and for holding shares on the basis of which calculations are made for a broad equity market index. A fair method is used for the calculation of the total shareholder return along with various assumptions like the interest received on shares being reinvested (Companies Act, Schedule 7A, paragraph 4). Service Contract – During the relevant financial year if any executive is provided with a service contract, the date at which the service contract has been provided, its duration and its terms and conditions should be mentioned in the remuneration report. A detail of the termination compensation the executive is entitled to receive along with the companys liability on early termination is to be included (Companies Act, Schedule 7A, paragraph 5). On the complete preparation of the remuneration report, in the annual general body meeting it is introduced and called for a vote by the shareholders of the company (Section 241A Companies Act). This concept of voting the remuneration report was a controversial topic as many commentators suggested the voting to be limited to only the remuneration policy rather than the whole remuneration report. The reason they point out is that the executives remuneration policies are futuristic in nature so the shareholders can express their opinion on the policies adopted ra ther than making aware of the actual remuneration paid to each individual director. 4.1.2 Other Requirements: a) Along with the preparation of the DRR, disclosure of the aggregate compensation of the executive, loan given to the executives and other company transactions with the executive should be done in the notes of the annual accounts as mentioned in Schedule 6 of the Companies Act. b) As per Section 251 of the Companies Act and Companies Regulations (1995), listed companies in their summary financial statements should as a statement, state its policies regarding the remuneration of executives and the companys performance graph. 5 Stock/Share Options – Are they the Best in an Executive Compensation package? The most prominent and important component of executive compensation, in order to merge the interests of the executives with that of the interests of the shareholders, is providing the executives with stock options in the firms they serve (Jensen and Meckling, 1976). According to Jeffrey A. Williamson and Brian H. Kleiner, A stock option is a security that represents the right, but not the obligation, to buy or sell a specified amount of stocks at a specified price within a specified period of time. Stock options granted to executives of many large multinational firms are much higher in value than the annual cash pay they are entitled to be paid which in-turn boosts up the overall total compensation provided to the executives. This makes stock options the single largest ingredient in the current scenario of executive compensation. In the United States itself, stock options are held by more than 10 million employees (Simon R. and Dugan J., 2001) out of which around 160,000 of them tur ned out to be millionaires (Tate E.A. and Wilson T.E., 2001). Initially stock options were provided as a bonus to all the key executives of a company, but during the recent years its use is restricted only to the top level management. Providing stock options have resulted in increased productivity of the organisations. Executives are aware that their gain is linked with the stock performance of the organisation therefore they strive harder and work more efficiently to achieve progress. The main objective behind granting stock options is to make sure that executive make a profit on the success of the companys operations and in case of failures they suffer. Hence executive stock options link pay to performance. Critics argue to provide shares of stock rather than providing stock options in order to link pay and performance. The value of a stock option is only one third the value of a share, in case of companies having an average volatile stock price and yielding an average dividend the reason being stockholders receiving the whole value along with the dividend payment and the option holders benefitting only from the additional returns that is over and above the exercise price. This implies that options have a greater leverage and at the same cost, a company can provide its executives with options that are three times as much as that of shares. Stock options are incentive plans that are future

Creating a Garden for the Blind :: Architecture Design Essays

Creating a Garden for the Blind In creating a garden for the blind, the senses of smell, hearing and touch take on prominence. Even without sight, a person can enjoy a garden simply by feeling the symmetry of leaves, touching the bark of different trees and feeling for buds at the start of spring. Even though a visually disabled person cannot enjoy the vibrant colors of a rose garden, they can enjoy the strong scent from such flowers. Because the sense of sight is taking aback seat in this garden, importance is also placed on maneuverability through the garden. A Braille board should be placed at the entrance to the garden, explaining the topography of the garden and how to maneuver through it without assistance. Another Braille board at the entrance should explain the garden. To facilitate easier movement, the garden could be designed after a clock. One should enter the garden at twelve o’clock and walk clockwise through the garden; at each point on the clock, one would encounter plants of various scents and textures. The path around the garden should be smooth and even in order to ensure easy independent movement. In contrast, small pebbles along the side of the path could indicate the presence of Braille boards that explain the plants. In addition, cobblestone or another stone variety could indicate the presence of benches. The flowerbeds could be raised about two feet from the ground. This would not only make it easier to touch and enjoy the featured plants but would also place flowers and plants at a perfect height for those guests with physical disabilities. Furthermore, these exhibits could include hanging pots with plants of special interest. The plants placed in such pots would be those with special textures or appeals. As the potted plants grows to large for the pot, it can be planted in the flower bed and replaced with another interesting plant or simply a smaller version of the original plant. As guests enter the garden, they should be greeted by the sounds of flowing water; a fountain or waterfall placed here would create a welcoming sound. Palm trees of various shapes and sizes placed around the water feature would provide an interesting texture for guests. Both the leaves and bark of these thriving plants would provide attractive textures.

Comparing the Families in Rowling’s Harry Potter and the Prisoner of Az

Comparing the Families in Rowling’s Harry Potter and the Prisoner of Azkaban and Hoban’s The Mouse and His Child Creating â€Å"worlds of their own, with particular kinds of boundaries separating them from the larger world†, families ideally provide encouragement and protection for each of their members (Handel, xxiv). In J.K. Rowling’s Harry Potter and the Prisoner of Azkaban, however, the Dursleys and Aunt Marge fail to fulfill their roles as Harry’s primary caregivers. In Russell Hoban’s The Mouse and His Child, the father mouse is unable to give his child all that he needs and longs for. In these two children’s stories, the expectation that families will provide physical support, emotional support, and encouragement for their children is not met. In Harry Potter and the Prisoner of Azkaban, the orphaned Harry is physically neglected by his only living relatives, the Dursleys. Harry’s Uncle Vernon, Aunt Petunia, and cousin Dudley think that by endorsing Harry’s non-existence in their lives, their fear of non-Muggles would disappear. Treating Harry like a wild animal, the frightened Dursleys physically confine Harry to their home and do not allowing their nephew any contact with the outside world. When Harry finally runs away from the Dursleys, he panics because his family never gives him Muggle money. While forcing Harry to stay indoors, the Dursleys also encourage Harry â€Å"to stay out of their way, which Harry [is] only too happy to do† (Harry Potter and the Prisoner of Azkaban, 24). Shunning communication and distancing themselves physically from Harry, the Dursleys fail at being the loving family that Harry needs and craves. By giving Harry little to eat and old clothes to wear, the Dursleys contin ue to treat Harry as n... ...ting and abusing him. In The Mouse and His Child, the father mouse is fond of his little son, but he is inept at keeping his family of two stable. Being a passive and pessimistic parent, the father mouse, like Harry’s aunt and uncle, fail at providing the mouse child with physical support, emotional support, and moral encouragement. Although they are family, the Dursleys and the mouse father provide a dysfunctional setting for Harry and for the mouse child, forcing their children to grow up painfully faster. Works Cited Handel, G. Introduction to the first edition, 1967. In The Psychosocial Interior of the Family. Ed. G. Handel and G.G. Whitchurch. New York: Aldine de Gruyter, 1994. xxiii-xxx. Hoban, Russell. The Mouse and His Child. New York: Harper & Row, 1967. Rowling, J.K. Harry Potter and the Prisoner of Azkaban. Vancouver: Raincoast Books, 2000.

Marketing Plan for a Premium (Branded) Product

Table of Contents No| Tittle| Pages| 1. 0| Executive Summary| 5| 1. 1~1. 2| Objectives ~ vision and mission| 5| 2. 0| Company Summary| 6| 2. 1| Background| 6| 2. 2| Company Locations and Facilities| 6| 3. 0| Products and Services| 7| 3. 1| Products Description| 7| 3. 2| Competitive Comparison| 8| 3. 3| Supply and Demand Details| 9| 3. 4| Technology Needs| 10| 4. 0| Market Analysis| 11| 4. 1| Target Market| 11| 4. 1. 1| Target Market Segment Strategy| 11| 4. 1. 2| Market Needs| 11| 4. 1. 3| Market Trends| 11| 4. 1. 4| Market Growth| 12| 4. 2| Industry Analysis| 13| 4. 2. 1| Industry Participants/Key Players| 13| 4. 2. | Main Competitors/Competitive Analysis| 13| 5. 0| Strategy and Implementation Summary| 14| 5. 1| Marketing Strategy| 14| 5. 2| Pricing Strategy| 15| 5. 3| Promotion Strategy| 15| 5. 4| Distribution Patterns| 15| 5. 6| Sales Strategy| 16| 5. 7| Sales Forecast| 16| 5. 8| Sales Programs| 16| 6. 0| Web Plan Summary| 17| 6. 1| Website Marketing Strategy| 17| 6. 2| Developmen t Requirements| 17| 7. 0| References| 18-20| 1. 0 Executive Summary 1. 1 Objectives My objective is to collect and research information to understand Audi Company better in terms of their company background, product and services and their marketing strategy.Examples are like their technology, competitors pricing, sales figures market growth and many more. 1. 2 Vision and Mission Vision: â€Å"Audi – the premium brand† Mission: â€Å"We delight customers worldwide† 2. 0 Company Summary 2. 1 Background Audi is under a parent company named Volkswagen Group which is a German automobile manufacturing company. Audi is a manufacturer of exquisite cars – beautiful, sophisticated machines that embody technological perfection. Audi is the Premium brand growing most rapidly and on course to become the world’s most successful Premium manufacturer.Audi has been recognised by the European Union for outstanding environmental protection, based on its long traditio n of minimising and reusing production waste. 2. 2 Company Locations and Facilities The worldwide network of Audi sites comprises the two German plants in Ingolstadt and Neckarsulm, as well as seven production facilities in Gyor (Hungary), Brussels (Belgium), Changchun (China), Aurangabad (India), Bratislave (Slovakia), Martorell (Spain) and Indonesia. 3. 0 Products and Services 3. 1 Products Description Type| Audi Q5 2. 0 TFSI Quattro (225PS)| Vehicle Type| Sport Utility Vehicle (SUV)|Transmission| 6-speed manual| Year| 2011| Price(RM)| 328,000| Engines| 1,984  cc (1. 984  L; 121. 1  cu in) I4 turbo| Acceleration(0-60mph)| 7. 0 sec| Maximum Speed| 130 mph| Tank Capacity| 75| Weight| 1850| Audi Q5 2. 0 TFSI Quattro (225PS) is a sport utility vehicle (SUV). The transmission for the car is 6-speed manual. Not only that, the Audi Q5 engine is 2. 0 litre engines comes with a turbo system which boost its engine capability, the acceleration from 0-60mph is 7. 0 per second and the ma ximum speed is 130mph which is approximately 233kmh while the tank capacity is 75 litres and the weight is 1850kg. 3. Competitive Comparison Type| Range Rover Evoque| Porsche Cayenne| Vehicle Type| Sport Utility Vehicle (SUV)| Sport Utility Vehicle (SUV)| Transmission| Six-speed Automatic| Eight-speed Tiptronic S with Auto start/stop function| Year| 2012| 2012| Price(RM)| 363,888| 570,000| Engines| 2. 0L Si4 4-cylinder petrol engine| 3. 6L V6| Acceleration(0-100km/h)| 7. 6 sec| 7. 5 sec| Maximum Speed| 217 km/h| 230 km/h| Tank Capacity| 70| 100| Weight| From 1640| 2030| 3. 3 Supply and Demand Details Audi Q series Annual Sales in all countries Production (unit)| Year| Year| Vehicles (Audi)| 2011| 2010| Q5| 183,678| 154,604|Q7| 53,703| 48,937| Q3| 19,613| -| Total Audi Q series| 256,994| 203,541| Based on the table above, Audi Q series annual sales for the model Q5 had increase from 154,604 for the year 2010 to 183,678 for the year 2011. The different of annual sales between year 201 0 and 2011 is 29,074 which means the supply and demand for year 2011 had increase. The total annual sales of Audi Company for 2010 are 203,541 whereas for the year 2011 is 256,994. The table above show that the total annual sales of the company had also increase 53,453 which mean the supply and demand of the cars increase from the year 2010 to 2011. . 4 Technology Needs As technology needs for the model of Audi Q5 is the engine. The engine Audi Company use for Q5 is 2. 0 litre engines comes with a turbo system which boost its engine capability and turbocharging for more power and greater efficiency   is a development of the engine that powers the likes of the current Audi TT and Volkswagen Golf GTI. The engine’s power and performance will be from 0-60mph is 7 seconds and the top speed will be 130mph or 209km/h. The horsepower can up to 211hp or 4300rpm and the torque will be 258 Ib-ft. or 1500rpm. 4. 0 Market Analysis 4. 1 Target MarketThe following are the strategy for tar get market. 4. 1. 1 Target Market Segment Strategy Market segmentation for Audi Q5 will be psychographic segmentation which means Audi Company divide the buyers into different categories based on social class, lifestyles or personality characteristics. For the target market segment will be differentiated marketing strategy which means Audi Company produces several types of car such as SUV (Sport Utility Vehicle), Sedan and Sport each targeting its own segment of consumers. As for the product I choose Q5 target market is towards consumer’s lifestyles from higher level income.The target market will be consumers who finding for more comfortable, powerful and luxury option. 4. 1. 2 Market Needs Audi Company is providing customer comfort and luxury cars. Audi have a very good warranty and aftersales services for the customers. Now for all the new Audi models, the customers can choose whether you want to have three, four or five years warranty. So with the few years warranty you ca n enjoy your driving and also no need to worry about the unexpected repair bills. 4. 1. 3 Market Trends Market trends for Audi Q5 is the technology its use for the engine. Audi Q5 has automatic start and stop function for greater fuel.Audi Q5 comes with the Driver’s Information System (DIS) can help consumer to save fuel. Not only that, the market trends for Audi Q5 is because comfort and luxury. 4. 1. 4 Market Growth Production (unit) Production (unit) Year Year Figure: Production of vehicles Audi Q5 Figure above shows the Audi Q5 pass four years production from 2008 to 2011. The models of Q5 have a production of 20,320 in year 2008. Then the production increase from 20,320 to 105,074 in year 2009. The different of both years are 84,754. The productions still continue increase from 2009 to 2010 which mean from 105,074 to 154,604.Lastly for year 2011, the production for the year is 183,678. Compare to the pass four years the production of Audi Q5 is continues increase. 4. 2 I ndustry Analysis 4. 2. 1 Industry Participants/Key Players The industry participant for Audi Q5 is Stefan Sielaff. He is the head of design in Audi Company. He joins the company in year 2006. The key player for Audi Q5 is towards the consumers with high level of income and age above 40. Not only that, Audi Q5 can also be for family uses because it is 7 seaters car. 4. 2. 2 Main Competitors/Competitive Analysis The main competitors for Audi Q5 are Range Rover Evoque and Porsche CayenneRange Rover Evoque: * The main strength of Range Rover Evoque is that it is the sport utility vehicle (SUV) with the engine turbocharged inline four-cylinder which can boost up to 240 horsepower, six-speed automatic transmission and impressive acceleration which is 7. 6 per second. Porsche Cayenne * The main strength of Porsche Cayenne is that it is also sport utility vehicle (SUV) with the engine 8-speed Tiptronic S which can boost up to 380 horsepower, Eight-speed Tiptronic S with Auto start and stop function and impressive acceleration which is 7. 5 per second. 5. Strategy and Implementation Summary 5. 1 Marketing Strategy Marketing strategy for the Audi Company is to hit the annual sales target or increase sales and profitable get back. Audi Company will choose the best strategy to gain profit in order to create customers value. Audi Company market segmentation will be psychographic segmentation which means for the model Q5, the segmentation will base on the individual lifestyles. Audi Company market target will be age above 40 and consumers with high level of income. The target market segment will be differentiated marketing strategy.This is because the Audi Company is going to target on few market segments and provide few models such as A4, TT and Q5. By setting the market targeting, company hope can get higher sales. The market position for Audi Q5 is to combine both aspect in terms of luxury and performance in order to make the Audi Q5 to become a perfect sport utility veh icle. With high quality and luxury car and have also good performance with high tech engine, better interior and exterior are more attract the consumers compare to others competitors. 5. 2 Pricing StrategyIn terms of pricing strategy, marketers have to look into competitors’ strategies and prices to make comparison. The pricing strategy for Audi Company is by cost-based pricing which is convincing consumers of the vehicles value. The company profit will be the most important issue in pricing strategy. Audi Company is using psychological pricing which means it is consider about the pricing but not the world economics. The higher the price of car is, the higher quality of the car is. 5. 3 Promotion Strategy The promotion strategies for Audi Q5 are advertising and public relation.In terms of advertising, Audi Company has to make decisions when setting the advertising budget which is objective, budget decisions, message and media decisions and advertising evaluation. The marketer had chosen the advertising budget by using competitive-parity method in order to prevent promotion war and know what the competitors plans. Public relation is that Audi Company builds a strong relationship with the customers. The public relation company will organise a special event for example car show to promote the cars. By organising the car show public relation people can introduce the benefit of Audi Q5 and the specifications. . 4 Distribution Patterns The distribution patterns for Audi Company will be wholesaling. Audi Company is the wholesaler and the Audi Company will hire selling agents to help the company to gain the sales. The selling agents will sell the cars direct to last consumers. The wholesaler will set the segmentation and targeting consumers in order to identify the consumers and build a strong relationship with them. Selling agents have to explain about the cars specification and pricing to the customers in details to make the customers understand about the car concept. 5. Sales Strategy Sales strategy for Audi Company for model of Q5 is Audi Company have a very good aftersales services and warranty. Each of Audi cars has a warranty of at least 3years. Then, consumers no need to worry about the high repairing cost. Let’s say a customer with an Audi car model of Q5 send his or her car to service and he or she is busying with the job he needs a car to go work while the car repairing. In this case, Audi Company will decide to give the particular customer a same model of car to use while the car is doing services. 5. 6 Sales ForecastThe annual sales for Audi Q5 in year 2011 are 183,678 units so the marketers aim that the next annual sales in year 2012 for Audi Q5 will be 500,000 units. The reason why the marketers aim for more annual sales is because the Audi Company objective is to get benefits. To gain more annual sales the marketing strategy have to be improve in order to have more supply and demand of Audi Q5. 5. 7 Sales Programs T he sales program for Audi Q5 is the marketers will set market segmentation, market targeting, market position and market differentiation to concentrate on a market to increase the annual sales.In terms of pricing, the marketers will consider the target market income level and needs to get an Audi Q5. The marketers also will consider about the consumer judgement on the product. The marketers have to do some promotion in order to introduce the product to the target market. In this case, the product is Audi Q5 so the marketers have to consider the suitable premium product promotion strategy. After all, the marketers have to set a distributer to sell out the product. The distributer is by wholesale which means the Audi Company has to hire a selling agent to distribute the product to the last consumer. 6. 0 Web Plan Summary 6. Website Marketing Strategy Website marketing strategy is something similar to marketing strategy but is only available in online business. First of all, the market ers have to select the target market for Audi Q5. The target market for Audi Q5 is basically on consumers which is with high level of household income and with age 40 above. Audi Q5 is a premium product so for online marketing the consumers have to look into more about details of the company and also the car. Furthermore, the marketers have to look into the competitor’s online advertisement make sure the competitor’s online marketing did not reduces the confident of the consumers.Then, the marketers have to improve the Audi Company advertising skills. In terms of pricing, the marketers have to look into the market target needs. By using psychological pricing which means the consumers thought that the higher price of the car means the higher quality of the car. The consumers buying Audi Q5 is to show status and personal characteristic. The marketers have to create an advertisement either create by own or by hiring the graphic designer. For Audi Company normally the mark eters will hire the famous graphic designer to create a fabulous website page.And the graphic designer will helps to create the content of the advertising which is the slogan of the Audi Company by giving consumers message about the car comfort and luxury. In addition, the marketers have to monitor the advertising in terms of maintaining the latest news of the website. 6. 2 Development Requirements The marketers have to make sure the budget of the advertising did not over the cost so that the company did not lose any profit. 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