Reading in chapter 12 I learned, the Executive Compensation practices within the U.S., question compensation packages in general. Executive compensation consultants usually purpose several recommendations for alternate pay packages. Professionals who are just stepping into the executive compensation field need both a broad understanding of how executive compensation fits with the strategic goals of the organization and a nuanced understanding of the details of the practice. Labor Unions have also voiced other various concerns focusing on social injustices due to the large difference in pay for nonexecutive’s employees. Compensation of the CEO and other top executives should be …show more content…
The legislation, which was enacted in July 2010, created financial regulatory processes to limit risk by enforcing transparency and accountability. President Barack Obama signed the act in 2010 to further enhance the transparency of executive compensation
practices. Companies are required to trade stock on public exchanges to comply with four major provisions.
• Provision One: Say on Pay, which allows companies’ shareholders the right to vote yay or nay on executive compensation proposals that are contained in proxy statements.
• Provision Two: Details independence requirements for compensation committee members and their advisors, such as compensation consultants and legal counsel.
• Provision Three: Requires that companies disclose the circumstance under which an executive would benefit from golden parachute arrangement.
• Provision Four: Requires that companies report the ratio of CEO compensation to the median compensation of its employees in SEC filings that require executive compensation