David W. Cobia

Case Studies of Executive Compensation in Agricultural Cooperatives

Few factors are more important for a cooperatives success than the manager. However, structuring a managers compensation package to deal with principal-agent problems is a challenge for cooperatives. Conceptually, this problem could be addressed with ex ante incentive clauses that would signal the boards preferences to the manager. The five case studies in this paper examine compensation and evaluation methods for managers of successful local supply and marketing cooperatives. These cases suggest a reluctance to use ex ante incentives to ensure performance.

Mergers and Diversified Growth of Large Grain Firms

Firm growth by merger has received considerable attention because of its potential effects on industry organization and, in turn, economic performance. Early mergers often increased horizontal concentration, but recent ones appear to have been more associated with vertical and conglomerate integration. This study of 35 large firms in grain processing and merchandising industries showed that growth by merger was relatively larger from 1954 to 1963 than from 1940 to 1954. All but eight of the 35 firms became more highly diversified. Increasing diversification was associated positively with initial firm size and the relative importance of external growth.