Executive Compensation Case Study

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When you compare executive compensation to household income, you noticed executive pay is not tied to performance, the average executive pay keep going up with no penalize from the board. “In the United States, the pay of CEOs at publicly traded companies went down in real terms by 46% between 2000 and 2011, although it bounced back—as did corporate profits—in 2012, while still remaining well below the 2000 level.” (Vanessa Sumo and Hal Weitzman, 2013).

CEO dishonesty behavior widespread and developed, “Consider the option backdating scandal in unites state in 2005 and 2006. The University of Iowa Erik Lie discovered that in many cases, companies granted stock options to executives just before stock price spiked. As a result the Securities
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A study held by East China Normal University on 2011, estimate these payments are more than the reported executive compensation by 2 to 50 times. The Chinese corporate governance is using two-tier board system with company law requiring the formation of a supervisory board, according to Harukiyo Hasegawa, and Carlos Noronha. Supervisory board are design to watch the board of directors, however they are not have the authority to vote on executive decision and the election of directors. Managers and finance officers, which weaken their supervisory role. “In developing economies like china, corporate ownership is highly concentrated in the hands of a single investor associated with the central or local government or government-controlled institution such as state-owned enterprises.” Harukiyo Hasegawa, and Carlos Noronha said. The firm accounting performance is negatively related to state ownership level, Claessens and Fan pointed. The China corporate governance model is control based, the state employ governance control listed firms. Between 1999-2001 lui found the largest shareholders own on average 44.8% of the share and one third of the CEO were chairman of board of directors. 70% of the board members were outside directors they were assigned by the controlling state and communist party secretaries. Chinese executive compensation is positively linked to …show more content…
Four parties are the main players of this model: Banks, management, the board of directors, and the government. Japanese corporations are allied with banks that are the largest shareholder of the corporation. Banks are fund provider, supervisor and monitor, and rescuer in cast the corporation has any financial suffering. The CEO is usually a retired government official, retired company CEO. Moreover the CEO has limited power due to social standards that require agreement within the company. Surprisingly that CEO at Japanese 100 biggest companies receive an average of $1.5 million annually, while their peers in US receive $13.3 million in big American corporation, according to consulting firm Towers Perrin. Japanese executive received 30% of their income is from bonuses related to financial metrics. It is not common to fir CEO or they resign if the company starts to fail. When the company profitability is high, the executives receive less that 6% of the time, and double digit annual stock on average of $22,000, via $1.8 million in US. The average Japanese executive compensation is less than one-sixth that US executive receive, and 16 times more than the average Japanese worker. Another example is the Japanese stock exchanges executives received an average of $580,000, in other hand; the 3,000 biggest US companies give their CEO an average of $3.5 million. In some companies they change the executive compensation pay,

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