Nobody downloaded yet

Executive Compensation - Book Report/Review Example

Comments (0) Cite this document
It is the objective of the author to critically analyze and evaluate three articles that have been published on the subject of executive compensation in recent years, compare and contrast the ideas put forth in the articles and finally to draw a conclusion based on the convergent or divergent opinions of the authors and researchers…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER93% of users find it useful
Executive Compensation
Read TextPreview

Extract of sample "Executive Compensation"

Download file to see previous pages Silva, published in the Journal of Managerial Issues in 2005 and "The corporate scandals and American capitalism" by I. M. Stelzer published in the Public Interest in 2004.
Jim Manzi in his 2007 article takes a close look at the increases in executive compensation that have taken place throughout the last two to three decades from the cold war era to the information and globalization age that the world economy is currently operating in. Manzi analyzes the theory put forth by Peter Drucker in 1979 relating to the difference in executive compensation when related to that of the lowest paid individual in the same organization. Manzi in his study has used much secondary data that is available to the public regarding executive compensation and laid out his own reasons for agreeing with such pay scales. According to Manzi, the regulations that have been suggested by the federal government and the securities and exchange commission in the United States that shareholders should be given the power to approve or veto the pay of the executives should help to some extent, though it will not be the be all and the end all of the problem. According to him the disparities in compensation of the CEO and the lowest level worker will still continue even after such a measure is pushed through by law as shareholders will still not have the necessary information to make accurate decisions on the health of the organizations that they are investing in and will continue to put their trust in the executives who act as agents of the organization whose stock they own.
On the other hand, Silva in his article published in 2005 has carried out a research study on the relationship between board compensation and the approval of CEO remunerations. Most studies of this nature in the past have relied heavily on secondary data, however Silva in his study has relied on primary data that has been gathered from the boards of Fortune 2000 companies. It was Silva's opinion that boards approved large or sometimes inexcusable remunerations for their CEOs based on qualitative performance results that could be manipulated by powerful CEOs. His hypotheses were that there was a positive relationship between the use of qualitative data to measure the performance of a CEO and the salary of the board and a negative relationship between the use of qualitative data to measure the performance of the CEO when the board's remuneration consisted of stocks and equity in the organization. The primary data that was gathered proved these two hypotheses correct and therefore it was Silva's opinion that when boards were paid in stocks and equity they were more careful to use quantitative performance measures that could not be manipulated when evaluating the performance of the CEOs whose compensation they approved.
The final article that was used in this evaluation related to the different corporate scandals and mishaps that have taken place throughout corporate America in the past decade or so. Like Manzi, Stelzer too relied heavily on secondary data for the information and opinions put forth in this article. In this article it is Stelzer's opinion that executives are not fulfilling their roles as agents of the shareholders and that the shareholders have no way of knowing this or avoiding this situation. According to Stelzer the reason for such scandal and gross negligence to take place is the ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Executive Compensation Book Report/Review Example | Topics and Well Written Essays - 1000 words”, n.d.)
Retrieved from
(Executive Compensation Book Report/Review Example | Topics and Well Written Essays - 1000 Words)
“Executive Compensation Book Report/Review Example | Topics and Well Written Essays - 1000 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Executive Compensation

Virgin Queen Elizabeth I

5 Pages(1250 words)Essay

The Debate on Executive Compensation

...?The Debate on Executive Compensation The debate over companies’ executive compensation in the recent past has been run in the highest possible tone.This is following the incommensurate pay they receive in the company’s overall performance. The executives’ pay has been discussed for a long time with the recent financial crunch just rekindling the debate. It has been a worrying moment for the certain economist why the executives’ pay maintains an exponential trend even at times that the companies are facing serious financial challenges. The logics behind this reasoning are that the executives’ pay should reflect their...
9 Pages(2250 words)Essay

Executive Compensation in Investment Banks

..."In recent years, investment banks have paid large bonuses to many of their employees. The collapse of several well-known organisations indicates that executive compensation schemes are inherently flawed, and that requirements to disclose these in the Reports & Accounts of listed companies do not provide shareholders with useful information about companies' long-term prospects." Introduction: This financial crisis, the biggest since the great depression of the 30s we are told, started early 2008 and several large organizations with big names like Bears Steins, Lehman Brothers, and AIG have collapsed. This has led to an unprecedented bail-out to companies by governments, which under normal circumstances are not eligible... these be...
8 Pages(2000 words)Essay

Executive Compensation Plan

...Executive Compensation Plan Executive compensation in McDonald's is defined as how the company's top executives are paid, which includes presidents, vice presidents, managing directors and general managers. Its purpose is to motivate leaders for their strategic requirements in increasing profitability and shareholder returns as well as compete for managerial talent and retain them in the company. The executive compensation program supports McDonald's business strategy dubbed as "The Plan to Win." The corporate strategy of winning focuses on people, product, place, price and promotion which would drive system wide sales...
4 Pages(1000 words)Term Paper

Executive Compensation Schemes

...Investment banks are known to pay exorbitant executive compensation schemes are which are not properly disclosed in company accounts.The current structure of disclosure of executive compensation does not provide a complete picture about the nature and magnitude of executive compensation. A company's audited financial statements and the corresponding supporting disclosures provide a firm-specific information set which is made available to investors and regulators. When this information is not properly disclosed, this will lead to future problems on the part of the company owners. A promising action to address this problem is to develop...
12 Pages(3000 words)Essay

Executive Compensation

...Executive Compensation Recently, the executive compensation in the United s has been the focus of public scrutiny as populist argument points tothis factor as the culprit behind the financial troubles of large American corporations. The political campaign of the then presidential aspirant Barack Obama was, for instance, seriously threatened when he was linked to Franklin Raines, the former Fannie Mae CEO , who was reportedly compensated $90 million from 1998 to 2003. Understandably, this is an important issue in America amidst the ongoing financial recession wherein thousands are losing their jobs. There is an ongoing public indignation over the idea that...
7 Pages(1750 words)Essay

Executive Compensation

... Executive Compensation Introduction According to Mercer (2009), the business environment has witnessed various transformations and one of them has been the heightened competition to gain a considerable market share. Moreover, globalization has heightened the competition level, which has been further propelled by the fact that cost of switching to another product or service is considerably lower and hence, organizations have been forced to exploit other avenues through which they can gain competitive advantage. Graham et al. (2008) stated that among the most exploited sources of competitive advantage include the integration of information technology into the business processes to improve efficiency and the recruitment... and...
3 Pages(750 words)Research Paper

Macroeconomic Stock Project

2 Pages(500 words)Essay

Executive Compensation and WorldCom

...Executive Compensation and WorldCom Executive Summary The WorldCom scandal is a typical case of corporate crime (violating security laws and fraud) driven by executive compensation and remuneration. Bernard Ebbers, the then CEO of WorldCom accumulated wealth by increasing the price of the common stocks he held in the company. However, the year 2000 decline that faced the telecommunication industry negatively affected the company’s growth strategy decreasing its stock price. Banks put pressure on him that the margin calls on his stock in the company, which financed his other businesses, be covered. Consequently, he took out loans from the company and...
4 Pages(1000 words)Essay

Alternative Approaches to Executive Compensation

...Summary Affiliation Alternative Approaches to Executive Compensation Shareholders have no control in some publicly traded companies. This gives the managers a lot of substantial power Managers may use this power to serve their interests There are two ways of linking executive competition and agency problem, which include the optimal contracting approach and the managerial power approach. Limitations of Optimal Contracting Agency problem experienced by managers CEO can influence the nomination process for the board directors The directors may never challenge the CEO’s pay, as they may want to please the CEO. Market forces are not strong enough to assure optimal contracting...
1 Pages(250 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Book Report/Review on topic Executive Compensation for FREE!

Contact Us