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BPA Faculty Recognition

Dr. Di Wu
Dr. Di Wu

Dr. Di Wu presented his and Dr. Ji Li’s research findings, “A Comparison Of Director Members Properties Between Single-Class and Dual-Class Firms”, at the Faculty Research Poster Presentation. Results from their research show that generally, the board size and number of independent directors has influence on the compensation plans and performance based awards. The dual-class structure seems to weaken using the performance based award and performance measures.

Dr. Ji Li
Dr. Ji Li

 

Dr. Ji Li presented her research findings, “Adoption of Performance Measures for CEO Compensation In Dual-Class Stock Structures”, at the Faculty Research Poster Presentation. Her findings suggest that adoption of a dual-class structure is consistent with shielding CEOs from short-term market pressures.

ABSTRACT:
A Comparison of Director Members Properties Between Single-Class and Dual-Class firms

Separation of ownership from control is a very interesting characteristics of some public firms in the U.S. and Europe.  Single-class and dual-class firms are hence defined based on whether shareholders receive disproportional voting rights associated with their cash rights.  However, analysts and researchers from the industry and academia express different opinions on whether the dual-class firms increase the firm and shareholder’s values or not.  Director members are in charge of executives’ compensation plan which may include performance based measures and cash or stock award, and the strategy is to align the executives’ interests with shareholder values. This study aims at studying director member properties of both single and dual class firms and their effects on compensation plan for executives. The results show that generally, the board size and number of independent directors has influence on the compensation plans and performance based award and the dual-class structure seems to weaken using the performance based award and performance measures.

Topic Area Business, Economics and Public Administration

ABSTRACT:
Adoption of Performance Measures for CEO Compensation In Dual-Class Stock Structures

Institutional investors have always been concerned about multiple classes of stock while dual-class companies advocate the value creation effectiveness of their structures. This study is among the first to examine the adoption of and provide new insight on performance measures in dual-class stock structures by looking at the design of performance measures in executive compensation. We hand collect data on CEO compensation contracts from 2007 to 2011 for all U.S. dual-class firms in the S&P 1500 in order to assess whether and how dual-class firms choose performance measures differently than do single-class firms. The findings are that market-based metrics are less likely to be used by dual-class firms relative to single-class firms. Peer-based measures are much less common for dual-class than single-class firms.  My findings suggest that adoption of a dual-class structure is consistent with shielding CEOs from short-term market pressures.

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