Sam Bigger Case Summary

The chairman of the Executive Compensation Committee is Howard Bigger, Sam Bigger’s son. Having family connections, Howard is considered an insider and shouldn’t be allowed on the committee. Betty Moneymaker should not be on the committee either. She is also an insider because she represents the company’s investment banker. The Governance and Nominations Committee normally sets the fees for the directors and the salary of the non-employee chairman. Since Sam Bigger was also the chair of the governance committee, the Executive Compensation Committee would recommend his salary too. This seems like a fair idea, until you realize that Sam’s son is the chairman of the compensation committee. Almost everywhere you look, one of the Bigger family members is in charge. A large portion of John Rock’s compensation is at risk. During strong performances of the company, John does very well financially. In tough times, which they are in now, he is less compensated. Howard Bigger and Harry Harmony feel badly for John and want to increase his wealth, despite Mega’s mediocre performance. It’s important for management to reward a strong current performance, but they need to avoid paying premiums for average or poor performances (in this case, Mega). They say he deserves to be treated well because he is a hard worker and a longtime loyal employee. …show more content…
He mentioned that important issues weren’t being discussed on the board, and John agreed with him. John began to open up to Jack, talking about his role as CEO and Sam’s dominance over the company. Even though Sam gave up the title as CEO to John, he didn’t want to hand over the power. Chapter seven of Corporate Governance says that CEOs would seek to enlarge their companies through acquisitions in order to have a positive impact on their compensation. It clicked for me that this is what Sam did with 20 companies back when he was the