Executive compensation

There are two main approaches of justifying CEO compensations. The first would be to justify high CEO compensations from a business or a managerial perspective. In other words, we would need to justify the pay-gap between chief executives and ordinary workers. The second would be to justify high CEO compensations from an economic perspective. An economic lens takes into account the rising economic inequalities, which is largely assumed to be non-existent or insubstantial in the first method, as well as taking into account the principals of supply and demand and so on. Using the work of John R. Boatright, Jeffery Moriarty, and Anthony Atkinson, this essay will explore both of these perspectives and argue that high CEO compensations is justified,…

Executive compensation has attracted wide attention from both theoretical and empirical researchers in the past two decades. Berle and Means (1932) first introduced the idea of chief executive officer (CEO) pay as a mechanism to align the interests of management with those of shareholders. A key issue of modern corporate governance is how to design compensation packages that give appropriate incentives to CEOs to maximise firm performance. To design an appropriate compensation package, the usual…

Executive Compensation For the purpose of this essay, executive compensation will be considered as an issue separate from other business issues. It will be assumed there is honest reporting to shareholders and the executives are behaving ethically with accountable for their conduct. If anyone in a company is performing unethically, regardless of their title, it should result in their termination. Non-profit enterprises, which enjoy tax benefits and public financial support, should develop a…

American Executives Compensation It is vital that the American population and her workforce understand why many of its U.S. executives are compensated with high salaries and stock options. This will allow an educated decision on why or why not executives should be compensated at a robust level. “It is clear that where once companies such as Ben and Jerry’s and Whole Foods Market were outliers in trying to limit CEO pay, more emphasis today is being focused on examining what executives are…

Describe the principles and processes for setting executive compensation. 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…

Executive Compensation: The Board of Directors, specifically the independent directors that compose the Management and Development and Compensation Committee, design executive compensation packages at General Electric. When these independent directors meet, they do so with the purpose of incentivizing the executive team, who has a significant impact on strategy, decision-making, and creation of value for the company. The Management Development and Compensation Committee is tasked with…

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…

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…

90% of Easterbrook’s compensation is at risk, being based on performance. In 2014, 93% of shareholders supported the approach for executive compensation. In the appendix, a pie chart provides the detail of CEO compensation. The five sections are salary, STIP (operating income growth), LTIP (return on incremental invested capital), options (share price), and RSUs (earning per share). We believe the risk-reward basis of the compensation structure is appropriate. With 90% of Easterbrook’s…

directors (BoDs) compensation, board independence and innovative knowledge assets could have correlation…