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Abstract This study investigates lobbying behaviour over the two phases of the 2009 Productivity Commission Inquiry into executive remuneration within Australia. Consistent with expectations, behaviours appeared related to preference for change, the costs of regulatory change relative to those of lobbying, and the need for reputational capital. Industry participants, and those from the Representative and Professional bodies emerge as key opponents. Industry presented in a conciliatory manner during the first phase, revealing a preference for the status quo, but then directly targeted specific recommendations of concern, notably the 'two strike' and 'no vacancy' rules in the second phase. Respondents from the Representative and Professional Bodies were broadly and consistently supportive of change and the Inquiry's final recommendations. We also find that these recommendations largely align with the views of the Representative Bodies, but conflict with those expressed by Industry in their second phase submissions. Finally, we find no evidence to suggest the motivation behind Industry lobbying related to poor remuneration practices. [ABSTRACT FROM AUTHOR]

Abstract: The primary focus of this study is to provide evidence on whether, during a period of economic turbulence, the personal reputation of CEOs holds up as a significant determinant of their remuneration, or whether the company''s financial performance and governance structures are the more dominant determinants of CEOs’ remuneration. Using secondary data sampled from Australian Top 200 listed companies over a 3 year period straddling the global financial crisis, this study models determinants of total CEO remuneration. The results reveal that CEOs’ personal reputation does have a positive significant effect on total remuneration. Of the company financial performance influences on CEO remuneration, volatility of ROE and the net operating cash flow are found to have the most significant effects on total CEO remuneration, as expected during the period of economic turbulence studied. Governance structures of remuneration committee independence and the extent of substantial shareholdings were found to not have significant effect on total CEO remuneration. [Copyright &y& Elsevier]

Abstract: This paper investigates the effect of increased shareholder oversight and disclosure about executive remuneration on the pay–performance relation, while controlling for contemporaneous changes in corporate governance practice. Our sample consists of 240 ASX-listed firms with annual reports available for each year over the period 2001–2009, a period which straddles the timing of regulatory change. We initially document the conjectured improvements in remuneration disclosure and shareholder oversight in the form of the advisory vote on the remuneration report. Following, we find as predicted a general strengthening of the pay–performance relation over the study period, with the increased sensitivity of reported CEO remuneration to firm performance being primarily related to enhanced remuneration disclosure and the non-binding shareholder vote on the remuneration report. Our results lead us to conclude that enhanced oversight over executive remuneration arrangements brought about by regulatory change has positively impacted the executive remuneration process by strengthening the pay–performance relation and making the process appear more accountable. [Copyright &y& Elsevier]

Abstract: This paper demonstrates the impact of the observed financial market persistence or long term memory on European option valuation by simple simulation. Many empirical researchers have observed the non-Fickian degrees of persistence in the financial markets different from the Fickian neutral independence (i.i.d.) of the returns innovations assumption of Black–Scholes’ geometric Brownian motion assumption. Moreover, Elliott and van der Hoek [Elliott, R.J., van der Hoek, J., 2003. A general fractional white noise theory and applications to finance. Math. Finance 13, 301–330] provide a theoretical framework for incorporating these findings into the Black–Scholes risk-neutral valuation framework. This paper provides the first graphical demonstration why and how such long term memory phenomena change European option values and provides thereby a basis for informed long term memory arbitrage. By using a simple mono-fractal fractional Brownian motion, it is easy to incorporate the various degrees of persistence into the Black–Scholes pricing formula. Long memory options are of considerable importance in corporate remuneration packages, since stock options are written on a company’s own shares for long expiration periods. It makes a significant difference in the valuation when an option is “blue” or when it is “red.” For a proper valuation of such stock options, the degrees of persistence of the companies’ share markets must be precisely measured and properly incorporated in the warrant valuation, otherwise substantial pricing errors may result. [Copyright &y& Elsevier]