1. TMTs & Executive Compensation

2. Top Management Team Who are they?

3. Top Management Team What do they do (key activities)?

4. Executive Decision Making Rational Decision-Making Model

5. Decision Biases Anchoring and adjustment Availability bias Escalation of commitment Fundamental attribution error

6. Decision Biases Correlation vs. causation Overconfidence Sampling bias (selection bias)

7. Executive Compensation In most publicly traded firms, CEO compensation generally includes: Guaranteed salary Cash bonus Stock options Perks

8. Executive Compensation How much do they make? Highest paid 2014 CEOs: McKesson $131M Lauren $67M Vornado Realty $64M Kinder Morgan $61M Average CEOs S&P 500 Overall U.S. $10.5M Alabama $4.5M Average TMT (incl CEOs) Overall U.S. $6.1M

9. Executive Compensation Are CEOs paid too much?