they 1902 17.) in 1992, the SEC introduced regulations requiring U.S. firms to disclose to their share. Due to continuing public concern about high executive compensation levels, the SEC holders information about the compensation of the firm's five highest paid executives introduced further disclosure regulations in 2006 and 2010. These included requirements for a management discussion of its executive compensation policies, improved disclosure of executive stock option awards including the amount charged to expense during the year for such awards (recall that in 1992 stock option expense was based on intrinsic value), golden parachutes, and increased risk disclosures. Section 10.7 briefly describes these regulations. In Canada, the Canadian Securities Administrators introduced Form 51-102F6, effective December 2008, and amended July 2011. These requirements are substantially similar to current SEC requirements. Sher R Required a. What are the arguments in favour of giving shareholders more information about executive compensation, including its relationship to risk management? b. Many of the disclosure requirements relate to longer-term incentive compensation, such as ESOs and/or restricted stock. What is the argument in favour of awarding compensation such as ESOs and/or restricted stock to senior executives? c. What are the arguments against making executive pay too dependent on ESOS? Explain. d. To what extent do you think that these disclosure requirements improve the working of the managerial labour market? Explain. Include a definition of a well-working man- agerial labour market in your answer. Also, evaluate these improvements relative to the power theory of compensation e. If the managerial labour market is fully efficient in processing information (that is analogous to an efficient securities market) , would manager incentive plans based on risky performance measures, such as share price and reported net income, be needed? Explain why or why not. B. Say-on-pay yntes hy sharhala