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 …show more content…
the World” that the highest executive pay is in the western countries with United State at the top. One hundred US CEO received over $15 million in 2012 as cash earning. In United Kingdom, executive compensation is higher than other European countries, followed by Germany and France. In comparing executive pay to worker pay, US CEO receive from 400 to 500 times the median salary for workers, in UK it is 22 times, in France it is 15 times, and in Germany it is 12 times. It the effort to control CEO pay, each countries applied different techniques, in some countries a “say-for-pay” policy give the right to shareholders to non-binding vote to approve or reject on CEO compensation package. The European Union suggested a binding vote on CEO pay for public companies. France limited the ration between CEO pay and the wage of the lowest paid workers. In Germany they placed restriction on CEO pay. “Incentive contracts are at best only partially effective in compensating for weak corporate governance,” according to Amit Seru, professor of finance at Chicago Booth, Adair Morse, formerly of Chicago Booth and now at Berkeley, and Vikram Nanda of Georgia …show more content…
Their two-tier board system is the best part in German corporate governance model. They have board of management, which has insiders. And board of supervisory, which has completely outsiders including labor representatives. Representation on German corporate boards of directors is split between labor and shareholders through an executive board and a non-executive board. This has given workers the ability to raise employee pay along with overseeing CEO salaries. This impact German executive pay that has been restrained by the Mitbestimmungsgesetz law, which requires that half the seats on companies’ supervisory boards represent the workforce. In favor of separation of management and supervision, no one can assign in the two boards at the same time. This supervisory board runs and advises the board of management and the board compositions are fixed by the law. Recently, there has been a development in Germany to include more outsiders, especially minority shareholder to complement the stakeholder-based approach to corporate governance. The German ECO received on average $4.5 million euros in 2010, contradict to US executive who earns on average $12 million euros. 29% of total executive income is from fixed salary, 50.2% from variable bonuses, and 20.8% from stock performance. The highest paid CEO in Germany was
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 …show more content…
the World” that the highest executive pay is in the western countries with United State at the top. One hundred US CEO received over $15 million in 2012 as cash earning. In United Kingdom, executive compensation is higher than other European countries, followed by Germany and France. In comparing executive pay to worker pay, US CEO receive from 400 to 500 times the median salary for workers, in UK it is 22 times, in France it is 15 times, and in Germany it is 12 times. It the effort to control CEO pay, each countries applied different techniques, in some countries a “say-for-pay” policy give the right to shareholders to non-binding vote to approve or reject on CEO compensation package. The European Union suggested a binding vote on CEO pay for public companies. France limited the ration between CEO pay and the wage of the lowest paid workers. In Germany they placed restriction on CEO pay. “Incentive contracts are at best only partially effective in compensating for weak corporate governance,” according to Amit Seru, professor of finance at Chicago Booth, Adair Morse, formerly of Chicago Booth and now at Berkeley, and Vikram Nanda of Georgia …show more content…
Their two-tier board system is the best part in German corporate governance model. They have board of management, which has insiders. And board of supervisory, which has completely outsiders including labor representatives. Representation on German corporate boards of directors is split between labor and shareholders through an executive board and a non-executive board. This has given workers the ability to raise employee pay along with overseeing CEO salaries. This impact German executive pay that has been restrained by the Mitbestimmungsgesetz law, which requires that half the seats on companies’ supervisory boards represent the workforce. In favor of separation of management and supervision, no one can assign in the two boards at the same time. This supervisory board runs and advises the board of management and the board compositions are fixed by the law. Recently, there has been a development in Germany to include more outsiders, especially minority shareholder to complement the stakeholder-based approach to corporate governance. The German ECO received on average $4.5 million euros in 2010, contradict to US executive who earns on average $12 million euros. 29% of total executive income is from fixed salary, 50.2% from variable bonuses, and 20.8% from stock performance. The highest paid CEO in Germany was