Nutrition Month Essays

Nutrition Month Essays Nutrition Month Paper Nutrition Month Paper Did you know that we celebrate Food Conservation Month in January; Heart Month and National Arts Month in February; Fire Prevention Month, National Women’s Month, and Tax Consciousness Month in March; Buwan ng Wikang Pambansa and National Lung Month in August; National Science Club Month in September; National Children’s Month and Consumer Welfare Month in October; and Filipino Values Month in November? Did I forget a month? Oh, yes! So, what are we celebrating this month? Oh my gulay, it’s Nutrition Month! By virtue of Presidential Decree 491 (aka Nutrition Act of the Philippines), the National Nutrition Council is spearheading this nationwide celebration, now in its 38th year, that carries this very meaty theme: Pagkain ng gulay ugaliin, araw-araw itong ihain. The 38th Nutrition Month celebration underscores the importance of vegetables to increase vegetable consumption as part of a healthy diet to address micronutrient deficiencies and non-communicable diseases, promote vegetable gardening as a source of additional food and income, and increase demand for vegetables to help local vegetable farmers. Nutrition Month focuses on vegetables for several reasons: Filipinos are eating less and less vegetables. From 145 grams per day in 1978, consumption has decreased to 110 grams per day in 2008. In terms of age groups, children six months to five years old consumed only a little amount of vegetables. Studies show that among the reasons for low vegetable consumption are: influence of family members who do not eat vegetables, dislike for vegetables because of taste and texture, cultural beliefs about vegetables, cost, preparation time, and fear of chemicals. In eating such vegetables, we can get nutrients such as vitamins A, B, C, E as well as potassium, folic acid, iron, and calcium. In eating vegetables, we can get health benefits unlike other foods; and the following are the benefits that we can get. Vegetables as part of a healthy diet can help prevent major non-communicable diseases such as cardiovascular diseases, stomach cancer, colorectal cancer, obesity, and diabetes. Consumption of vegetables can help prevent micronutrient deficiencies. Vegetables ensure an adequate intake of most micronutrients, dietary fibers, and a host of essential non-nutrient substances. Eating vegetables may help decrease bone loss as vegetables decrease the amount of calcium excreted in the urine. It may help lower calorie intake and thus help in maintaining healthy weight because vegetables are low in calories and do not contain cholesterol. Vegetables contain antioxidants and protectants such as carotenoids, lycopene, and phytochemicals, which can help strengthen the immune system, reduce the risk of diseases, and contribute to well-being. Our school, Our Lady of Caysasay Academy, first celebrated Nutrition Month which had certain contests for us students that we really enjoyed. Contests like The Making of the Nutri-Board, by section, which will be divided into 2 groups and will compete for the representative of the class and the other contest was Veggie Fest, which is also by section, wherein, 3 representatives will be picked to cook a certain dish that will test our creativity. For Grade 7, the dish given to them is Vegetable Salad; sophomore, Malunggay Dish; Junior, Chop Suey; and for the seniors, their own and original dish. Well, I’ll just mention the places that we’ve got. For the Nutri-Board, even though the other group won, I’m still grateful that they got the first place. And for the Veggie Fest, we earned the second place. It is our first time to celebrate it, I can say that it’s a success and we had a lot of fun. There are certain students who won and who didn’t, but whatever happens, we accepted reality. We still have the next year to further make a lot of practice and such to really win. I’m hoping that our school will still celebrate it next year, for it is such a wonderful experience. .

FDR essays

FDR essays The world has known many great leaders, especially in the post-Civil War era. Winston Churchill, Martin Luther King, Jr., and Harry Truman all rank with the most prominent leaders of all time. However, in my opinion President Franklin Roosevelt made the most difference out of anybody in this century. He began a new era in American history by ending the Great Depression that the country had succumbed to in 1929. Without him ending the Depression, who knows where this country could have gone? His social reforms gave most people a new perspective on government. Government was not only expected to protect the people from foreign invaders and affairs, but to protect against poverty and joblessness in ones own country as well. He not only changed the country for the better of everyone, he also made substantial gains on what a president could do for his country. His accomplishments as president will never be duplicated. Public opinion was so overwhelmingly for him that he was elected to off ice four times, which most likely will never be duplicated again. His reign in office came at, by the far and away, the most difficult time in American history. Not only did he accept the challenges at hand, he rose to the occasion and took this country to another level. Roosevelt was born on January 30 near New York City. He graduated from Harvard in 1904 and attended Law School. Although he didn't get his law degree, he was admitted to the New York bar in 1907. He was elected to the New York senate in 1910 and was appointed by Woodrow Wilson as assistant secretary of the navy, a post he held during World War I. Roosevelt ran for vice-president in 1920 and lost. In 1921, he was stricken with polio, which left his legs paralyzed. Twice he was elected Governor of New York and in 1932, he defeated Herbert Hoover for President. After taking office, Roosevelt immediately took drastic action to respond to the Great Depression. He promoted labor laws the be...

Gp ip4 training and development Research Paper Example | Topics and Well Written Essays - 250 words

Gp ip4 training and development - Research Paper Example The internet is an appropriate and powerful technology for facilitating the services offered by the sales team in the organization. The internet allows the storage of data and information locally while enabling accessibility from different locations within the organization. Technology is changing the world quite fast, and its wide acceptance will enable easy connectivity with the outside world. It also inspires the revolution of old companies towards technological change and acceptance (Wilson & Wilson, 2012). The issue of equity among the individuals being trained is assured via the use of response forms that entail questionnaires and surveys that participants will fill each day after classroom activity. As the training manager, the implementation of a free and fair learning environment would be encouraged to facilitate easy learning and addressing of individual concerns among the sales team. Guaranteeing that no individual is lagging behind in training would be solved by involving experienced sale representatives in the exercise procedure. In the case any of the participating trainees have a form of disability, for example, a disability that prevents them from sitting for more than 30 minutes at a time, the management team will provide specialized tasks for these individuals. There are specified tasks listed for individuals with disability, for example, ushering in clients at the organizations entrance or sales or customer care stands that offer periodical sitting and standing options (Mukherjee, 2012). The possible issues with training a group of employees in their 20s and 30s is the possibility of disagreement and conflict between the age groups. This might be brought about by the need for displaying competition between the age groups. The organization is on board with the training procedure and it also adheres to the set regulations for performing a human resource exercise for the organization. In

List given to choose from Research Paper Example | Topics and Well Written Essays - 2500 words

List given to choose from - Research Paper Example This book made the Berlin Wall a more emotional experience for me as a reader. Beller, Miles. American datelines: major news stories from colonial times to the present. Chicago: University of Illinois Press, 2003. Print This book highlights landmarks and milestones in American history, based on news stories from the colonial period until the present. It is a compilation of news articles from the initial copies of Boston News to the current major publications. This book features newsworthy additions on the accounts of the fall of the Berlin Wall, as well as the Clinton Impeachment and the OJ Simpson trial. This book helped me gain a general perspective of various landmark events in American history. It provided an account of the fall of the Berlin wall which was written from an American perspective. Through such accounts, I was able to gain a general perspective of the Berlin wall. Brager, Bruce. The Iron Curtain: the Cold War in Europe. London: Infobase Publishing, 2004. Print. This book presents an analytical approach to the issue of political boundaries in the world. It studies the Central European part of the Cold War, presenting the peaceful and dangerous competition between the US and the Soviet Union. It also establishes the origins of the Iron Curtain from its start during the end of the Second World War to its end during the fall of the Berlin Wall in 1989. This book provided a European perspective of the Cold War, including the impact of the Berlin Wall on Germany and on the rest of Europe. This perspective enabled me to understand why the wall was built in the aftermath of the Second World War and in the advent of the Cold War. Chapin, Wesley. Germany for the Germans?: the political effects of international migration. London: Greenwood Publishing Group, 1997. Print. This book evaluates the impact on migration on German society. It reviews migration in the face of its political and modern history. This analysis indicates the impact of Germans, in the i mmediate aftermath of WWII, migrating to other countries on the countries they were migrating to as well as to their homeland. This study was undertaken in order to provide an analytical discussion for international relations, comparative politics, and migration. This book provided an analysis of the Berlin Wall based on the trends of migration and their impact on the Germans. It helped me understand the Berlin wall based on the discussion of emigration, in the light of the actual building of the wall and its impact on the economy of Germany with its recruitment of foreign guest workers. Davey, Thomas. A generation divided: German children and the Berlin wall. London: Duke University Press, 1987. Print. This book is largely based on the author’s interviews with children at both sides of the Wall. The author also gathered information by participating in their daily lives, collecting their drawings, conversing with their teachers and family members, and basically assessing how children can be attentive to what is going on in their country. This study presents a powerful book and a dramatic image of the younger generations of Berliners coping with the complicated political scenes which have caused the division of Berlin. This book gave another personal outlook of the Berlin Wall and its impact on the citizens, most especially the younger generation of Berliners. It gave me a different outlook on the impact of the

Lay investiture Research Paper Example | Topics and Well Written Essays - 1250 words

Lay investiture - Research Paper Example Kings had taken some duties and trappings entitled to priests while some priests and bishops governed as feudal lords. The church lacked the governing power because the pope did not have coercive power to implement ecclesiastical policies. As such, it was necessary to employ the secular arm that was willing to implement the will of papacy. The monarchies saw the new action of papacy as usurping their power and as a result, conflicts emerged (De-La-Noy 1993, 72). During the time when Norman rule was established in England, there was a great need for change in the relationship between secular and church authorities. Gregorian reforms, which favored a central authority of Rome when dealing with local churches in Europe, were not fully accepted by Western Europe’s kings and monarchies. There was an increase in the effectiveness and scale of papal influence in local churches. At the same time, the powerful government established by Norman monarchy in England often opposed the influ ence and intervention of the pope in the affairs of local churches. As such, papal intervention and interference by the monarchy in the affairs of local churches led to investiture conflicts. ... After the death of William in 1100, Anselm returned to England after being invited by a newly installed King Henry 1. Anselm supported Henry’s rise to the throne against a protracted conflict with his brother, Robert. However, due to respect for papal decree, Anselm declined to support Henry’s demand to honor him and obey his commands. In addition, Anselm rejected to consecrate bishops that the king wanted. Henry did not want to quarrel with him while at the same time, he did not want to compromise the monarchy’s rights to homage and investiture (De-La-Noy 1993, 74). Despite mutual respect between Henry and Anselm, there was a direct conflict between them. Henry, who was not as violent as his predecessor Rufus, was resolute. He summoned Anselm and insisted that he pay homage by consecrating the bishop and priests that he had proposed, or he would leave the country. Anselm did not take any of the two options offered by Henry because he had deep conviction that he had to respect the pope, and it was his personal decision to either accept or decline the king’s demands. The conflict compelled the two to send emissaries to Rome in order to negotiate ways of solving their conflict. Pope Pascal II answered back by praising the king’s faithfulness on the matter but maintained his predecessor’s stand that forbade investiture and homage (Wilhelm 1990, 44). After a series of negotiations conducted by the king’s emissaries and the pope, there was some compromise in which Henry was allowed to invest in some bishop, but the 1102 letter by Pope Paschal II did not touch on homage but criticized investiture fervently. The Roman Council, which was attended by

Rate Law and Activation Energy Essay Example for Free

Rate Law and Activation Energy Essay Introduction In this experiment we are analyzing the relationship between reaction rates at different concentrations and temperatures to determine the true rate constant, activation energy, reaction orders, and half-life of a reaction. The reaction of interest is the addition of a hydroxyl group to the nucleus of Crystal Violet. Crystal Violet, or hexamethylparaosaniline chloride for short, is a strongly colored purple dye with the chemical formula C25H30N3Cl and disassociates completely in solution. The relevant structure for this compound can be seen in figure 1 Figure 1 The base that is being used for the reaction is the strong base Sodium Hydroxide, or NaOH. This molecule also completely disassociates in water. Because measuring the concentrations of reactants is difficult in a simple lab setting, the reaction between Crystal Violet and Sodium Hydroxide will be measured through light absorbance. As the reaction between the chemicals takes place and the Crystal Violet receives the hydroxide the overall intensity of the purple color will decrease thus affecting the absorbance. The absorbance of the solution will be measured with a colorimeter as the reaction takes place and will be interpreted as a direct representation of concentration of Crystal Violet. After the reaction has taken place, through analysis of graphs plotting absorption vs. time, the natural log of absorption vs. time, and the inverse of absorption vs. time the reaction will be determined to be either zeroth, first, or second order with respect to crystal violet. From here the a pseudo rate constant can be determined, and using comparisons of different constants at different concentrations of NaOH solution and different temperatures, the reaction order with respect to hydroxide, the true rate constant for the reaction, and the activation energy for the reaction can all be determined with the following equations respectively. equation 1 Where k2’ is the pseudo rate constant of the reaction using twice the initial OH- concentration as is used in the k1’ reaction and n is equal to the reaction order with respect to OH-. equation 2 Where k’ is a pseudo rate constant based off of absorption and n is the reaction order with respect to OH- determined by equation 1. equation 3 Where k1 is the reaction constant at temperature T1, a is a constant that can be ignored due to the way the equation will be utilized, R is that gas constant, and Ea is the activation energy. Procedure The following materials were needed for the experiment: 4 100mL beakers 250mL beaker 2.5Ãâ€"10-5M Crystal Violet Stock solution 0.10M NaOH Stock solution Distilled Water 10 dry plastic cuvettes and caps Stirring rod Vernier Colorimeter 50mL volumetric pipet 100 µL syringe 2 10mL vials Logger Pro software Vernier computer interface Hot plate Vernier temperature probe 1. First, 100mL of 0.10M NaOH solution was obtained using a 50mL volumetric pipet, and 0.05M was prepared using a the pipet, the stock 0.10M NaOH solution, and distilled water. 2. The Logger Pro software was engaged and both the Vernier colorimeter and temperature probe were plugged into the appropriate channels. The temperature of the room was measured and the colorimeter was calibrated by setting the 0% light and 100% light conditions. 3. The colorimeter was set to 565nm and 1mL of 2.5Ãâ€"10-5M Crystal Violet solution was mixed with 1mL of 0.05M NaOH solution and quickly added to the colorimeter. Data correlating time, temperature, transmittance, and absorbance was then recorded for seven minutes as the reaction between the two solutions took place, and this data was saved. 4. This previous step was repeated two additional times with the 0.05M NaOH solution, and then three times with the 0.10M NaOH solution. 5. Last, two 10mL-vials of 0.05M NaOH and 2.5Ãâ€"10-5M Crystal Violet solution were prepared in a warm bath solution on the hot plate. Once the temperature reached 35ËšC and was recorded, steps BLANK through BLANK were repeated again twice with the heated solutions of Crystal Violet and 0.05M NaOH. All of the data that was collected was saved and distributed between the two lab partners and all excess solutions were disposed of properly under the fume hood. Results The following are the graphs obtained from the absorption and time recordings of the third run for the reaction between 1mL of 0.05M NaOH and 1mL of and 2.5Ãâ€"10-5M Crystal Violet carried out at 22.62ËšC. figure 2 figure 3 figure 4 These plots show that the reaction order with respect to crystal violet is clearly 1st order due to the great r2 value of the linear trend line. Since our pseudo rate constant based off of absorption is equal to the negative slope of our linear plot, our k’ in for the reaction of 1mL of 0.05M NaOH and 1mL of and 2.5Ãâ€"10-5M Crystal Violet carried out at 22.62ËšC is 0.1894. These next three plots are the graphs obtained from the absorption and time recordings of the first run for the reaction between 1mL of 0.10M NaOH and 1mL of and 2.5Ãâ€"10-5M Crystal Violet carried out at 22.50ËšC. figure 5 figure 6 figure 7 As expected, these results still indicate a reaction order of 1 with respect to crystal violet as demonstrated by the linear plot on the figure 6. Our k’ in for the reaction of 1mL of 0.10M NaOH and 1mL of and 2.5Ãâ€"10-5M Crystal Violet carried out at 22.50ËšC is 0.2993. Now that we have two pseudo reaction constants in which the OH- concentration differs by a factor of 2, we can use equation 1 to obtain the reaction order with respect to OH-. Since the reaction order must be an integer we can see that the n must be 1. It is now know that for the reaction, the reaction orders with respect to both reactants are 1. At this point, the true rate constant can be determined using equation 2, where n is 1, the initial concentration of OH- is 0.05, and the pseudo rate constant k’ is 0.1894. These next three plots are the graphs obtained from the absorption and time recordings of the first run for the reaction between 1mL of 0.05M NaOH and 1mL of and 2.5Ãâ€"10-5M Crystal Violet carried out at 36.09ËšC. figure 8 figure 9 figure 10 Once again it is apparent from the three plots that the reaction is first order with respect to crystal violet. However, the reason we performed this last kinetic run was to obtain a value for k at a different temperature. This way we have two sets of values for equation 3 with two temperatures, and two rate constants. With this information we can cut out the pre-exponential factor a and solve for the activation energy. But first k must again be calculated for the reaction at the new temperature. Doing this the same way as done in calculation 2, we obtain a reaction constant of 4.964 – a higher value, which is to be expected with the increase in temperature. Now, manipulating equation 4 we obtain that equation 4 While plugging the proper values provides which after some arithmetic leads to a calculated Ea of 15,254.67J, or 15.25467kJ. The calculation for half-lives for the different conditions is simple, and just requires the following equation. equation 5 When using the rate constant found in calculation 1, t1/2 for the kinetic run for the reaction between 1mL of 0.05M NaOH and 1mL of and 2.5Ãâ€"10-5M Crystal Violet carried out at 22.62ËšC is found to be 0.183 seconds. Error Analysis In this experiment there are several things calculated and several sources of error to take into account. Error needs to be calculated for the rate constants k, for the half-lives, and for activation energy. The errors for the pseudo-rate constants are obtained using the LLS method. Once these are obtained the next step is to calculate the error in the true rate constants. When calculating the error in true rate constant once must apply both the error in the pseudo rate constant and the error in the measurement of volume for the 100 µL syringe as it pertains to the concentration of hydroxide. The error in the syringe is 0.02mL, which for 0.05M NaOH solution leads to an error in concentration of approximately 1Ãâ€"10-3M and 2Ãâ€"10-3M for 0.10M NaOH. Equation 2 is manipulated to solve for the true rate constant. The following equation is used to solve for the error in the true rate constant. equation 6 And when the derivatives are solved is equal to equation 7 And when the numbers are plugged in for the first kinetic run looks like calculation =.08 In other words, the rate constant for the first kinetic run came out to be 3.79 ±.08. Now when calculating the error in the half-life the only thing that has to be taken into consideration is the error in the rate constant, which was just calculated above. Using the same method, equation 5 is solved for half-life, and the error is calculated like so. equation 8 Which after the derivatives are solved is equal to equation 9 And of course after the correct values for example the first kinetic run are plugged in provides calculation = .004 And last but nowhere near least, is the error analysis for the activation energy. With this the error for the true rate constant must again be taken into consideration, and the error for the temperature probe. The error for the true rate constant has already been calculated, while the error for the temperature probe is provided in the lab manual as being  ±0.03K. Taking these into consideration, a very complex process follows. The same process as above was used but involving much more complicated and lengthy derivatives. First equation 3 was manipulated to the following form. equation 10 The derivative of this equation with respect to each variable (T1, T2, K1, and K2) was then taken squared, and multiplied by the square of the respective variables uncertainty. These were added up and the square root was taken as in the above methods. The end result was a calculated error of 2 KJ for the calculated activation energy of 15kJ. Figure 11 Overall this lab was very successful in the use of absorption as a method of monitoring change in concentration. The calculated errors all seem to be about what one might expect. This lab was very analytical outside of one glaring hole. You can see in figure 9 a slight curve in the plot that isn’t found on either figure 3 or figure 6. To me this seems to be because the reactants are heated up to a temperature around 35-36ËšC, but once the chemicals are mixed and placed in the cuvette the temperature is no longer controlled as the reaction takes place for the following seven minutes. Thus, as the temperature falls the rate of the reaction slows, and the pseudo rate constant is lower than it should be. This of course leads to a rate constant lower than it should be, and then the activation energy is affected as well. If I were going to change one thing about the lab, I would try and do something to control the temperature as the reaction persisted. Aside from that, there is little room for error outside of obvious blunders. Conclusion A reasonable value for activation energy was calculated from the data collected in this experiment. There were no major mistakes made in the laboratory, and the calculations all went smoothly. This experiment demonstrated that there are creative ways around difficult problems in the laboratory, such as measuring absorption in place of concentration to follow the progress of a reaction. References- Alberty, A. A.; Silbey, R. J. Physical Chemistry, 2nd ed.; Wiley: New York, 1997. Department of Chemistry. (2013, Spring). CHEMISTRY 441G Physical Chemistry Laboratory Manual. Lexington: University of Kentucky

Stock Options With Fixed Exercise Prices

Stock Options With Fixed Exercise Prices Table of Contents (Jump to) 1 Introduction 2 Fixed Price Options versus Indexed Options 3 Case for Indexed Options 3.1 Compensation for Relative rather than Absolute Performance 3.2 Protection of Managers during Market Downswings 3.3 Reduced Expected Costs 4 Case against Indexed Options 4.1 Unpredictability 4.2 Difficulty in Controlling Compensations 4.3 Larger Deadweight Costs. 4.4 Tax Treatment 4.5 Reluctance of Managers 5 Reasons for Choosing Alternatives of Indexed Options 5.1 Requirements of Firms 5.2 Sensitivity of Payoff 6 Empirical Evidence 7 Conclusion 8 References 1 Introduction The principal-agent problem has long been a matter of discussion within organisational institutions. As a matter of fact, the owners of a limited company normally elect a Board of Directors to control the business’s resources on their behalf. However, conflict arises among these managers and shareholders due to their different objectives. As owners, shareholders would want to maximise profits while managers may want to maximise sales, build empire buildings and enjoy perks. To align the interests of both stakeholders therefore, compensation of managers should be linked with the firm’s performance. One way to do this is the introduction of options: fixed price options and indexed options. Basically, an option is a financial derivative representing a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. Fixed price options and indexed options differ significantly from each other. For the purpose of this assignment, we will discuss how indexed options provide a better case compared to fixed price options. 2 Fixed Price Options versus Indexed Options Fixed price options whose exercise price is already agreed upon and will remain the same until expiration date. The option exercise price is usually set equal to the stock price at grant. When an executive is given a fixed price option as a means compensation, two situations can arise. If the share price rises above the exercise price, the executive gains. On the other hand, the executive receive absolutely nothing if there is a decrease in share price In contrast, an indexed option is a stock option whose exercise price is connected to a benchmark index, which may be a specific sector index or a broad market index. Indexed price options have unknown selling price when contract is being made, and the final price of the option depends on market status on the expiration date. A change in the absolute value of the share will have no effect unless thecompanyoutperformssomestatedindex suchastheSP500 or a group of peers. Then only, the optionwillbeexercised. 3 Case for Indexed Options 3.1 Compensation for Relative rather than Absolute Performance Fixed price options reward performance in absolute terms. If the share price increases, the executives are rewarded in spite of rising market trends being unconnected to managers’ performance. Executives are still rewarded if competitors’ or the market have performed better. Similarly, when the share price falls, no rewards are given even if the firm did better than its peers. On the other hand indexed options reward relative rather than absolute performance. Hence, executives do not enjoy windfall gains by luck in rising markets, but by their performance instead. Only if the company performs better than the market or its peers that the executives can cash in. The executives have therefore further incentives to deliver good performance. The example below gives a better idea of how indexed options actually reward relative performance. XYZ ltd.’s equity stock is currently selling for $100 per share when the market (benchmark) index is at a level of 1000. XYZ limited grants an option to its CEO which enables him to purchase an option consisting of 100000 shares at an exercise price of $100, but the same will move in line with the market in future. Taking a specific case, the CEO is given indexed options. The value of the option granted to the CEO under 4 various scenarios is shown in the table below. Value of Indexed Option under Indexed Options SHAREPRICE INDEX Rises Falls Outperforms the index Index: 1150 (by 15%) Exercise price: $115 (by 15%) Stock price: $120 (by 20%) Value of option: $500,000 Index:850 Exercise price: $85 (by 15%) Stock price: $90 (by 10%) Value of option: $500,000 Underperforms the index Index: 1150 (by 15%) Exercise price: $115 (by 15%) Stock price: $110 (by 10%) Value of option: $0 Index: 850 (by 15%) Exercise price: $85 (by 15%) Stock price: $80 (by 20%) Value of option: $0 Table 1 From Table1, indexed options only reward the CEO when the companies’ stock outperforms the market, even if indexes have increased or decreased. They have a fair way of rewarding CEOs; they do not reward under-performingexecutives nor do they penalize superior performers whenever the market index has increased or decreased in respective cases. This is a convenient way of keeping CEOs motivated and thus encourage them perform well in their duties of decision making for a company’s investment. In general, indexed options reward superior performance under all market conditions. However, if the same example is taken in the case of fixed price option, and that there is a 5% change in the share price, the scenarios will differ as follows: Value of Option under Fixed Price Options SHAREPRICE RISES Exercise price: $100 Share price: $105 (by 5%) Value of option : $500,000 EXERCISE OPTION FALLS Exercise price: $100 Share price: $95 (by 5%) Value of option: $0 NOT EXERCISE OPTION Table 2 As shown in Table 2, when the share price increases from $100 to $105, the option is exercised to the benefit of the manager. The latter receives a compensation of $ 500,000. In the reverse case, when the share price falls to $95, the shareholders gets no compensation. 3.2 Protection of Managers during Market Downswings In the case of fixed price options, executives are not rewarded when the market is declining because share prices are below the exercise price. However, indexed options can well reward managers in bearish markets as long as the decline in the company’s stock price is less steep than that of his peers. Indexed options reward better performers. 3.3 Reduced Expected Costs Traditional options plans reward employees as long as the share price is higher than the grant price. However, indexed options eliminates the possibility that managers can be compensated for share price movements that are unrelated to what they might have done. Thus it helps a firm to remove or lower undeserved compensations. A study by J. Angel and D. McCabe values that the expense of providing conventional options to executives at the 100 largest NYSE-listed companies is 41 percent more than the expense of providing options that take out market outcomes. The lower expected costs against future earnings of indexed options compared to fixed priced options can only be to the advantage of companies. 4 Case against Indexed Options The advantages of indexed options over fixed price options are flagrant in light of the above. However, the application of indexed options is still rare. They lag behind fixed price options in many ways. 4.1 Unpredictability Unlike indexed options, fixed price options brings predictability and certainty to a transaction due to the fixed exercise price. Through the characteristic of ‘all or nothing’, the manager will exercise, and therefore make money, if and only if the firm’s stock price is above the exercise price. 4.2 Difficulty in Controlling Compensations Budgeting and forecasting business costs are made easier using fixed value plans. They allow for firms to plan and control how much compensation to offer to employees. Retention risk, in particular concerning non- executive staff members, can be largely minimised when compensations are close to that offered by rival companies. Indexed options, on the other hand, can cause large discrepancies in compensations and the loss of key employees. 4.3 Larger Deadweight Costs An indexed option plan has a greater deadweight loss compared to a traditional option plan. This is because, with agency problems, where the interests of owners and managers do not always line up, there is the need to expose the managers to firm-specific risk to encourage a specific type of behaviour. However, this means that they are unable to diversify their portfolios to their full potential, exposing them to both systematic and unsystematic risks while compensating them only for the systematic portion of risk. Consequently, managers will always value their equity-based compensation at less than its market value. 4.4 Tax Treatment So as to obtain favourable tax treatments, a company can grant incentive stock options. However, according to the 1994 US Code, this entails that the option price should be less than the fair market value of the stock at the time such an option is granted. In this case, it implies that the option price be fixed on the grant date. 4.5 Reluctance of Managers Managers are unwilling to accept a compensation plan based on relative performance. This is because in the case of fixed price options, when the stock market performs well, they reap high rewards for stock price performance unrelated to their own efforts. Managers are reluctant to forego the potentially huge rewards conferred by the bull market, especially when they estimate that a downturn is less likely to occur in the stock market. 5 Reasons for Choosing Alternatives of Indexed Options Besides, it should be noted that indexed options are not suitable in all cases. Some reasons are illustrated below and the corresponding alternatives are also suggested. 5.1 Requirements of Firms Compensation systems have the following functions: to compensate managers for completed work, to reduce principal-agent costs by more closely aligning managers interests with those of shareholders, and to retain the manager. Compensation that accomplishes one of these functions successfully may not carry out the other functions of a compensation system as effectively. Stock options, for instance, serve to align incentives. However, a firm where incentive alignment is not that important, would not be keen to use stock or stock options to compensate its managers. It would rather use cash compensation Cash avoids the deadweight costs that accompany any equity-based compensation plan. 5.2 Sensitivity of Payoff Indexed options do not work as expected in practice. Instead, their payoff tends to be highly sensitive to market price movements. As the market increases, the value of the variable-exercise-price option increases too. For example, Lisa Meulbroek of Harvard Business School shows that the estimated value of an option indexed to the SP 500 rises by 15% if that stock index rises by 15%. Clearly, indexing does not even achieve its aim; separating the general market movements from the movements in the value of the option. An alternative design that rewards managers only for performance and not for that is due to overall gains in the market or industry can be considered. Instead of using the firm’s stock as an underlying asset, an alternative design employs a performance benchmarked portfolio. Under this proposed structure, the value of the portfolio changes to reflect the firm’s performance, net of market and industry effects, while the exercise price remains fixed. (Meulbroek, 2001). 6 Empirical Evidence A brief empirical review will determine whether relative performance is compensated in practice. We also explore if indexed options are indeed better than fixed price options. According to Gibbons and Murphy (1990), chief executive officers are compensated upon relative performance. It was found that there is a positive and significant relationship between the remunerations of CEOs and the firm performance, but an inverse and significant one with the industry and market performance. On the contrary, Bertrand and Mullainathan (1999) report that CEOs are remunerated for market-wide and industry movements that they perceive as luck. However firms that are better managed reward their CEOs less for such market movements compared to other firms. Sloan (1993)’s also found that CEO compensation depends on earnings so as to help separate market movements from the reward. With regard to the effectiveness of indexed options, in their works titled â€Å"Indexing Executive Compensation Contracts† in 2013, Ingolf Dittmann, Ernst Maug and Oliver G. Spalt gave empirical evidence that indexed options provide incentives at a higher cost than conventional options. 7 Conclusion In light of the above, it is observed that stock options with fixed exercise prices do not properly link managers’ performance to compensation since they relate to absolute and not relative performance reward. Indexed options have higher incentive advantages over the fixed price option since it takes into account the skills of the executives. It is also highlighted that indexed options result in a lower compensation costs than equivalent fixed price options. Nevertheless, the drawbacks and suitability of indexed options should not be ignored either. As a result, a firm is well advised to properly weigh the costs and benefits of indexed options before applying them. 8 References Angel, J. and McCabe, D. (2002). Market-adjusted options for executive compensation. Global Business and Economics Review, 4(1), pp.123. Bebchuk, L. and Fried, J. (2004). Pay without Performance, The Unfulfilled Promise of Executive Compensation, Part III: The Decoupling of Pay from Performance. 1st ed. [ebook] Harvard University Press, p.24. Available at: http://www.law.harvard.edu/faculty/bebchuk/pdfs/Performance-Part3.pdf [Accessed 25 Sep. 2014]. Bertrand, Marianne, and Sendhil Mullainathan, (1999), Are CEOs Rewarded for Luck? A Test of Performance Filtering, (Princeton University, Mimeograph). Chandra, P. (2007). FINANCIAL MANAGEMENT. 1st ed. 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