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Executive Compensation, Agency Theory, Teaching Methods, Employee Stock Options, CEO Pay
Business students may dream of receiving pay packages like that of Michael Eisner at Disney. However, many of them will work for the compensation consultant who determines the economics of the pay arrangements, for the valuation consultant who values the different components of the pay arrangements, for the accountant who must audit the financial statement impacts of the pay arrangements, or as a manager in the company whose employees respond to the incentives provided by the pay arrangements. No matter their eventual role, it is critical that every student understands these various aspects of executive pay arrangements, and how these practices have evolved over time. The course module presented herein is designed to effectively integrate these perspectives in as few as five or as many as nine 80-minute sessions that could be a substantive component of an MBA or Master of Accounting capstone course, or a component of a corporate governance elective. A case based on the CEO compensation of Boeing Inc. over the last 60 years provides a series of assignments that effectively integrate the module.