The Hidden Nature of Executive Retirement Pay

There are two competing theories of why public companies pay executives generous retirement benefits. One is that retirement pay is easier to hide from shareholders than other forms of compensation. The other is that retirement benefits align executives’ interests with those of long-term creditors, since the executives may not receive their payouts if the firm goes bankrupt. The latter view depends on the assumption that retirement benefits put executives in a similar contractual position as the company’s creditors. Yet no previous work has tested that assumption.

This Article provides the first systematic study of the contractual structure of executive retirement payouts. Using retirement pay data for thousands of executives, we show that a large proportion of executives link the value of their payouts to the company’s stock price and receive the bulk of these payouts immediately following their departure—features that contradict the incentive-alignment theory of retirement pay. The evidence also shows that the full amount and structure of retirement pay are undisclosed—findings consistent with the camouflage theory. While the structure of some executives’ payouts can be reconciled with the incentive-alignment theory, current rules do not give investors the information they need to tell the difference between payouts that align incentives and those that camouflage compensation. Lawmakers should require companies to reveal the structure of these payouts, and neither regulators nor commentators should assume that retirement benefits suppress top managers’ appetite for risk.

Saving the IRS

The current controversy involving the IRS’s administration of the exempt organization (EO) tax laws is simply the latest in a long succession of similar questions spanning at least five decades. This essay proposes addressing the problem through increased transparency of the IRS’s administrative actions involving EOs. Opening up more decision-making to public scrutiny would tend to deter IRS misbehavior, reduce suspicions of such misconduct, and promote fuller communication both to establish impropriety and avert false charges against the agency. 

Common Sense about Common Decency: Promoting a New Standard for Guard-on-Inmate Sexual Abuse under the Eighth Amendment

When inmates claim they are sexually abused by their prison guards, many courts scrutinize their claims to determine, as a threshold inquiry, whether they allege objectively serious injury. Courts often hold that guard-on-inmate sexual abuse does not inflict that level of injury, and therefore does not violate the Eighth Amendment or impose cruel and unusual punishment.

The dominant body of law arrives at the wrong conclusion because it focuses on the wrong question.  It asks whether guard-on-inmate sexual abuse imposes a threshold level of physical or psychological harm on an inmate. Instead, Eighth Amendment case law should simply ask whether a guard’s sexual abuse of an inmate, as specifically defined in current federal law, can be justified by any legitimate prison-management purpose. If it cannot, the law should presume that guard-on-inmate conduct violates contemporary standards of decency, and thus violates the Eighth Amendment.

This Note will demonstrate that courts’ misdirected focus has negative ramifications beyond its maladjustment to our society’s contemporary standards of decency. First, courts are less likely to find that male inmates meet the injury threshold. Consequently, the dominant standard often results in male inmates receiving less recognition and relief than female or transgender inmates for psychological injuries suffered from sexual abuse. Second, this disparate treatment and certain language in the case law promote a discourse about gender that proves problematic for men, women, and transgender persons alike.

Through this Note, I offer two fairly simple solutions to eliminate this disparate treatment and adjust Eighth Amendment standards to more closely correspond with current sexual abuse law and societal norms. Using emerging case law and Supreme Court precedent, I enumerate specific standards that advocates and courts can use to properly redirect the focus of the Eighth Amendment inquiry from the injury threshold to whether contemporary standards of decency have been violated by guard-on-inmate sexual abuse. State and federal law show our current societal norms deeply condemn such abuse, and suggest courts should presume violations of contemporary standards of decency in specified circumstances of sexual abuse.