Why Is Executive Compensation Important

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1. Why is executive compensation important? How does it relate to a company’s values?
Executive compensations hold importance because executives have a wide range of responsibilities and need to have incentive to perform for the company as well as their shareholders. If these executives are not correctly compensated they will have less motivation to lead the company in a correct manner. This also reflects on the company’s values because the way they incentivize their executives sets a tone through out the company for how they value their leadership.
2. What is “Say on Pay”? “Say on Pay” is a regulation that states it is imperative for shareholders to vote on the compensation of the executives in a company. It is a term used for the Dodd-Frank
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What does the term “stakeholders” mean? Name at least five of a company’s stakeholders, and generally describe each stakeholder’s interest.
Stakeholders can be a person, group or organization that has any vital interest in the company.
Shareholders: Their role is to essentially to provide investments in the company so that it may develop and grow. If the company does well they profit and vice versa.
Customers: They will ultimately decide whether the company will fail or succeed depending if they will support them by purchasing the product or service. They
Employees: After customers, they are the second most important in the company’s survival. They carry out the jobs for the company to succeed. They are directly affected by any decision the company makes, because they may be laid off or receive a raise depending on the status of the company.
Suppliers: They provide raw materials for the companies to buy from. Depending if the company is succeeding or not affects the amount of material being bought from the supplier. Together they rely on each others
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I have been brought to the company based on my expertise and will deliver based on my knowledge and integrity the fair compensation. I do support “Say on Pay” because I believe the shareholders should posess some control on the executive board’s pay but at the same time I know between the executives and the shareholders it will be an on going dispute that will not end well. Fortunately, they can bring an unbiased expert from outside the company to asses the compensation fairly like myself. It is clear in this situation that a “middleman” is

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