Harvard Business Review

JUNE 3, 2011

The fact is, because of the structure of their compensation, CEOs are rewarded for share price volatility not performance. Using the same indexing approach, the current stock price would be $94. Stock Price. Black-Scholes Valuation based on stock price at issue. Stock Price. Tom's Compensation.

Black-Scholes 15

Black-Scholes CEO Price Bottom-up 15

Harvard Business Review

SEPTEMBER 29, 2014

In the 1900s, French mathematician-economist Leon Walras envisioned prices in a market economy being set by an auctioneer (since known as the “Walrasian auctioneer”) conducting continuous auctions for all kinds of commodities. Most markets “clear” by having prices signal producers to make just enough that purchasers are willing to purchase.

Strategy 12

Strategy Black-Scholes Airlines Price 12

Harvard Business Review

DECEMBER 22, 2016

The EFV measures of CEO stock-based pay that will be used in complying with the Portland Ratio Disclosure Rule are flawed to the point of being fictitious because the formulae by which they are estimated fail to capture significant changes that can, and often do, take place in a company’s stock price over time.

CEO 8

CEO Black-Scholes Price Merton 8