Washington, Oct 23 (ANI): A new University of Missouri study has found that decreasing option-based compensation of chief executive officers (CEOs) help in reducing risky investments.

After the recent credit crunch, people have criticised firms' large executive pay packages.

In fact, John White, director of the Securities and Exchange Commission's Division of Corporation Finance, has urged all U.S. companies to consider reduce compensation packages that reward excessive risk-taking by executives.

The new study provides evidence that decreasing stock option-based compensation of CEOs after companies' earnings restatements leads to a decrease of risky investments and improved profitability.

An earning restatement occurs when companies revise their earnings from what they previously reported, because of accounting irregularities or errors.

"While stock options can be used to persuade mangers to take risky positive projects, high levels of options can induce excessive risk-taking in investment decisions," said David B. Farber, assistant professor of accountancy in the MU Robert J. Trulaske, Sr. College of Business.

He added: "When these investments do not produce net positive returns, managers may engage in earnings management to mask underperformance. This can ultimately result in a restatement."

For the study, the researchers analyzed 289 firms that had earning restatements from 1997 to 2001.

It was found that in comparison to other firms, firms that restated earnings were more likely to re-contract with their CEOs after the restatement and reduce the proportion of CEOs' total compensation that was stock option-based.

Following such reduction, the firms saw a decrease in risky investments and improved operating performance, which led to a better bottom line.

"It's easy for the well-intended CEO who has too many stock options to take risky investments. The research results strongly support that a decrease in option-based compensation reduces CEOs' incentives to take excessively risky investments, resulting in improved profitability," said Farber. (ANI)

Mumbai, Oct 23 (ANI): The benchmark Sensex tumbled by over 488 points and again dipped below the 10,000-mark in early trade on Thursday.

The Indian Rupee also hit a record low of 49.68 against the US dollar at the forex market.

Retail investors dumped stocks due to melting global stock markets and dismal quarterly results by some corporates.

The National Stock Exchange (NSE) index Nifty also tumbled by 147.05 points, or 4.13 per cent to 2,918.10.

The 30-share index, which had lost 513.49 points on Wednesday, fell by a whopping 488.62 points, or nearly 4.8 per cent at 9,681.28, a level last seen in July 2006, as all the sectoral indices were trading in negative zone with losses between 2.2 to 5.85 per cent.

Major losers which dragged the Sensex down were Bharti Airtel, L and T, RIL, ICICI Bank, Reliance Infra, BHEL, SBI, Infosys, Tata Consultancy, Satyam Computers, Tata Steel and Wipro.

Meanwhile, the US Dow Jones Industrial Average plunged 5.69 per cent last evening, while most of the Asian stock markets were down by almost 6 per cent in opening trade. (ANI)

New Delhi, Oct 22 (ANI): Civil Aviation Minister Praful Patel today said that India's airline companies are to repay upto 28 billion rupees outstanding aviation fuel dues to state-run refineries by March 2009 in six monthly installments.

Talking to reporters after meeting with Petroleum and Natural Gas Minister Murli Deora, Patel said that oil firms have agreed to raise the credit period for local carriers to 90 days from 60 days, and refineries would revise jet fuel prices every 15 days instead of 30 days.

"Cumulatively all the oil companies have an outstanding towards all the airlines of close to about 2500-2800 crores depending on the latest figures. The airlines in view of the difficulties have expressed that this outstanding shall be cleared by them in six monthly installments," he added.

Patel said that the industry is lobbying hard to pressurize the government to reduce the Aviation Turbine Fuel (ATF).

Patel said he has been urging the Gvernment to reduce taxes on ATF.

"I have conveyed it to the finance ministry, I have met Chidambaram and we have had a word about the taxes imposed on the aviation sector. The ATF is high and is imposed by the states also apart from what the centre imposes. It is high time that we reduce the tax and rationalize it. This demand is not new, I myself have been pressing for it for four years now," said Patel.

Shares of the top carrier Jet Airways rose 2.7 percent to 235 rupees, while the Kingfisher Airlines climbed 3.5 percent to 42.5 rupees after the minister's comments.

But state-run oil firms such as the Indian Oil Corp, the Bharat Petroleum Corp and the Hindustan Petroleum Corp were down 2-7 percent.

The Indian aviation industry, which has combined revenue of six billion dollars, is expected to lose two billion dollars in the current financial year.

After witnessing second fastest growth in the civil aviation world, the Indian aviation industry has hit a huge air pocket and is going through turbulence.

By 2008, the industry had 20-25 per cent excess capacity that too concentrated mainly on trunk routes.

Most of the airlines were recovering only 60 per cent of the actual cost of flying each passenger, which further got aggravated due to sharp hike in fuel prices. (ANI)

Noida, Oct 22 (ANI/Business Wire India): AREVA T andD India's Transmission and Distribution Division (T andD) has been awarded a contract worth 35 million euros with Bhilai Steel Plant (BSP)1, a flagship unit of the "Steel Authority of India Ltd" (SAIL), the largest steel manufacturer in India.

This contract includes a 132kV Gas insulated substation and Air insulated substations. It will also include the complete revamping of the existing protection and control system and feeding the new sub stations through 132KV transmission cables.

AREVA will provide its state-of-the-art protection, control and monitoring system for the existing substations. This project is scheduled for delivery by October, 2010.

"The transmission and distribution market in India is booming. Thanks to the support of our sales network covering the entire country, we were able to match our customers' expectations. Through this project, we significantly increase our presence in the Steel Sector, allowing us to demonstrate our state-of-the-art technology", said Rathin Basu, Country President and Managing Director of AREVA T andD India.

1 BSP has been awarded seven-time winner of Prime Minister's Trophy for best Integrated Steel Plant in the country. It is India's major producer of rails and heavy steel plates and major producer of structural. The plant is the sole supplier of the country's longest rail tracks of 260 meters with an annual production capacity of 3.153 MT of saleable steel. It specializes in steel products also. (ANI)