2018 Nike Executive Compensation Program Proxy Research Project https://materials.proxyvote.com/Approved/654106/20180720/NPS_367571/HTML1/nike-proxy2018_00

2018 Nike Executive Compensation Program Proxy Research Project https://materials.proxyvote.com/Approved/654106/20180720/NPS_367571/HTML1/nike-proxy2018_0019.htm?r2#4 Student Research Project: Proxy Statement Analysis
Locate the latest proxy statement for one of the three companies listed below (see “Notes” for
guidance in locating proxy statement):
1. Starbucks
2. Bed Bath & Beyond
3. Nike
For the company you select, you will analyze the company’s executive compensation program.
Specific factors to be considered are presented below. Refer to materials in Chapter 12 of the
text for clarification of compensation terms and to SEC Regulation S-K, Item 402 – Executive
Compensation, for disclosure requirements. Address the following questions:
1. What are the objectives of the company’s executive compensation program? Do they appear
to support the business strategy of the company? If so, how? Demonstrate the linkage. Would
you make any changes to the company’s executive compensation objectives or philosophy?
If so, what would you change? Why?
2. How is the CEO’s performance assessed? On what factors is the CEO assessed? Based on
what you have learned about performance appraisal in this course, are the factors/measures
used to assess CEO performance appropriate? Are the factors used to assess the performance
of the CEO adequately described? Do they align with the company’s strategy? Why or why
not?
3. What is the CEO’s total compensation for the most recent year? Does this level of
compensation appear to be warranted? Why or why not? Support your response with
appropriate arguments, references, or comparisons.
4. What percentage of the CEO’s annual compensation is “at risk” (performance-based)? Does
the amount of pay at risk change your view of whether executive pay is too high? Why or
why not? [Note: If not clearly stated, annual at-risk pay can be easily calculated by dividing
the non-equity incentive received by the sum of salary + non-equity incentive pay.]
5. What percentage of the CEO’s total compensation is equity-based? Do you think this level of
stock or options grants is appropriate? Why or why not? How do equity grants align with
stockholder interests?
6. Most professionals rely on comparisons of executive pay with Total Shareholder Return
(TSR) as an indicator of “fairness” in executive pay. Does the company you selected use
TSR? What is your opinion of TSR as the measure for assessing CEO performance? What
alternatives exist? Support your response with appropriate references.
7. What is Section 162(m) of the Internal Revenue Code and what does it mean for executive
compensation? How has the impact of this tax provision changed with the Tax Cuts and Jobs
Act of 2017?
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Student Research Project: Proxy Statement Analysis
8. The SEC has adopted a final rule implementing the provision of the Dodd-Frank Act that
requires U.S. public companies to disclose the ratio of their CEO’s compensation to that of
their median employee. This rule goes into effect the first time a company files a proxy
statement after January 1, 2018. What is this ratio for the organization your selected? Do you
believe that this “Pay Ratio Disclosure Rule” will be beneficial in controlling executive
compensation? Why or why not? Support your response with appropriate arguments and
references.
9.
Dodd-Frank also requires periodic “Say on Pay” votes by shareholders. What does this
provision of Dodd-Frank require? Do you believe this rule will be beneficial in controlling
executive compensation? Why of why not?
10. What is your personal take-away from this assignment? In other words, what did you learn
that you did not know about executive compensation prior to this assignment? What
benefited you the most from the assignment?
The proxy analysis should be prepared as a research paper following APA guidelines. Do not
merely answer the questions. The analysis must have a title page followed by an abstract and text
with major section headings addressing each of the issues identified above. For example, the
first section heading after the Abstract might be titled “Executive Compensation Philosophy.”
This heading should be followed by a narrative discussion and evaluation of the executive
compensation objectives or compensation philosophy of the company. Be sure to address the
questions posed above in your narrative response in each section. The paper should be doublespaced and limited to a maximum of 8 pages, excluding the title page and references.
Notes:
1. SEC Regulation S-K, Item 402 is summarized in a website sponsored by the
School of Law, Cornell University
(www.law.cornell.edu/cfr/text/17/229.402).
2. A Proxy Statement can frequently be located on the company’s corporate
website. It can also be located at www.sec.gov. Enter the EDGAR database,
enter the name of the company, and locate the latest version of Form DEF 14A.
This will be the Proxy Statement.
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