Free

Limiting Financial Executives' Compensation - Term Paper Example

Comments (0) Cite this document
Summary
The world economy seems to be reeling under one of the worst depressions after the Great Depression of the 1930s.While the crash of Wall Street on Black Tuesday in 1929 was the major cause of The Depression, the causes leading to the current economic crisis seem to be somewhat similar and also related to the Wall Street to some extent.
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.5% of users find it useful
Limiting Financial Executives Compensation
Read TextPreview

Extract of sample "Limiting Financial Executives' Compensation"

Should the compensation of the executives of the big banks be limited The world economy seems to be reeling under one of the worst depressions after the Great Depression of the 1930s.While the crash of Wall Street on Black Tuesday in 1929 was the major cause of The Depression, the causes leading to the current economic crisis seem to be somewhat similar and also related to the Wall Street to some extent.
Economists and financial experts the world over have assigned several factors for the current economic slowdown in the U.S and other parts of the world. The most common among these are subprime lending, revoking of regulations separating commercial and investment banking, and a more than necessary free hand to the banking sector to decide its risk-worthiness. While the financial innovations helped the stock markets grow at a whopping pace in the 1990s and early 2000s, they also brought about a false euphoria and when the bubble burst, the current slowdown was imminent.
The 1980s heralded many changes in the banking and securities exchange sectors the world over. It was an era of deregulations and free flow of currency.Due to changes in policies related to the stock market like bond trading, invention of securitization, interest-rate swaps, and credit-default swaps, bankers could increasingly make huge profits in the stock markets in the past two -three decades. Financial services also benefitted from higher investments made in securities by the increasingly wealthy population, encouraged by the IRA and 401 (k) plan.
With everyone making money, there seemed to be clout surrounding the financial experts, and the growth of private banks was considered synonymous with economic growth. According to Simon Johnson, "the great wealth that the financial sector created and concentrated gave bankers enormous political weight-a weight not seen in the U.S. since the era of J.P. Morgan (the man)."
In the same article, the chart showing the percentage of financial industry's profits as a share of U.S business profits indicates a slow increase from 5% to about 20 % from 1948 to 1988.From 1988 to 2006, the share of this sector rose to almost 40%.In contrast , the pay per worker in the financial sector as a percentage of average U.S. compensation rose from around 120% in 1948 to almost 200% in 2007, growing sharply from 1988 to 2007.This just shows how investment bankers had an increasing say in the economy of the U.S and were highly respected and beyond questioning. Jeff Maderick writes that the government lacked foresight in the financial industry. He writes, "The few federal agencies responsible for regulating the financial community ignored the dangerously risky activities of bankers and traders; so did the Federal Reserve and the US Treasury."
Before the recession set in and even during the same, the czars of the finance world have demanded ostensible compensation packages and bonus. In 2005, the CEO of Meryll Lynch was paid a bonus of $14 million, and though the demand was turned down, had asked for a bonus of $30 million in 2008.When the federal government released $ 243 billion as emergency relief to the finance sector in 2008, $18 billion was doled out as year end bonus to employees of Wall Street, once again affirming the demi-God like position held by these financial experts.
In my opinion, it is high time, these finance gurus were seen for what they really were. While they and their banks made humungous profits, the country and the common man has paid for it. The government needs to be more vigilant and pass more regulatory orders, restraining these bankers from serving their own interests while draining the economy of billions of dollars. They might have been the blue-eyed boys, but they needed to act in a more responsible manner. If they are responsible for the current state of the economy and rising unemployment rate, they own some moral responsibility and need to voluntarily own up and take pay cuts. Just as excess of anything is bad, too much capitalism and greed has left its marks on the economy. Instead of still keeping these investment bankers on a pedestal and doling out financial aid packages, the government needs to restrict the role and scope of private banks n the country.


References
1. Johnson, Simon. The Quiet Coup, the Atlantic, May 2009, accessed on 22 Nov,2009.
http://www.theatlantic.com/doc/200905/imf-advice
2. Madrick, Jeff. They Didn't Regulate Enough and Still Don't. Nov,2009 at the New York Review of Books. accessed on 22 Nov,2009.
http://www.nybooks.com/articles/23323 Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Limiting Financial Executives' Compensation Term Paper”, n.d.)
Limiting Financial Executives' Compensation Term Paper. Retrieved from https://studentshare.org/miscellaneous/1509212-limiting-financial-executives-compensation
(Limiting Financial Executives' Compensation Term Paper)
Limiting Financial Executives' Compensation Term Paper. https://studentshare.org/miscellaneous/1509212-limiting-financial-executives-compensation.
“Limiting Financial Executives' Compensation Term Paper”, n.d. https://studentshare.org/miscellaneous/1509212-limiting-financial-executives-compensation.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Limiting Financial Executives' Compensation

Compensation

...? Compensation Task: Compensation Evaluation of Jobs and Job structure Job A: Chef Designated Job Line Cook, under skill factor, the line cook scores 2 points for each category of education, experience and ability. In supervision, the line Cook scores 1 point for each of the fiscal and supervisory responsibilities respectively. Under effort, the cook scores 3 for physical effort and 1 for mental effort. Under working Conditions, the cook scores 2 for each of the location, hazard and extreme environment degrees. Total points scored are 18 out of 30. Job B: cashier The job description fits that of a cashier. Under the skill factor, the cashier scores two points for experience and ability. Under supervisory,...
4 Pages(1000 words)Case Study

Compensation and Benefits - Financial Reward System

...Compensation and Benefits- Financial Reward System Introduction Compensation and Benefits in financial reward system is very important for organizations because it helps in systematic organization of tasks and human resources with the purpose of attaining sustainable growth of the organization. Employees’ performance and motivation is depended on the financial as well as non-financial rewards provided by the organization and thus it can be stated as one of the important factors to boost the performance of the employees. An effective financial reward system should consider the organizational structure, its culture along...
8 Pages(2000 words)Term Paper

Executives Pay

...have too increased by that fold. Furthermore, the article argues that shortage of good executives would drive pay up even further in the future. The top 250 executives do not have a big difference in talent; it's merely a case of the size of the company these executives run. Also, Lucian Bebchuk argues that pay is not parallel to performance or productivity, and that CEO's take great care to hide their true compensation. Reform or Bust The practices of the bankers brought the financial system on the brink of collapse. After help from taxpayer dollars, the financial system is getting back to normal and paychecks are reaching are in line...
4 Pages(1000 words)Essay

Limiting Your Topic

...Client’s 2 March Limiting the topic Choosing a topic is quite easy but the intricacies involved in narrowing it down are many, this paper will aim at demystifying the intricacies and it will also try and provide a clear procedure with the help of which a topic can be narrowed down and can be limited. Frustration is inevitable should a person decide a topic hastily, limiting the topic can ease that frustration. Very few people think about limiting the topic before choosing a topic. Limiting and narrowing down the topic is integral, for instance if a reader decides to choose drama of the nineteenth century, he would get access to several dramas but to...
1 Pages(250 words)Essay

STRATEGIC LEADERSHIP BY EXECUTIVES

...Running Head: Strategic Leadership The Challenges and Opportunities of the Dynamic Business Environment for CEOs A Discussion Paper Name of Professor Date of Submission Empirical findings show that the qualities of the executive group are important determinants of organisational performance. However, none of these investigations has taken into account the challenges in making judgments about performance determinants in a dynamic business environment, or the effect of the external connections of the CEOs on firm-level outcomes (Bass, 2007... )....
2 Pages(500 words)Case Study

Compensation

...Compensation CHAPTER 2 The specific organization under analysis is Facebook. Facebook is an Internet search giant and is renowned for its cutting edge approach to social media technology. A review of Facebook’s compensation policies demonstrates that it implements an innovator strategy. This is a strategy that has been widely adopted in the technology industry. For instance, Microsoft also offers these compensation packages with bonuses built in for innovative design. Essentially the Facebook approach to compensation offers employees wages that are commensurate with those in the technology industry ("You are here:," 2011). These wages are augmented by bonuses that are...
2 Pages(500 words)Essay

Limiting Factor

..., and £13,008,000 for Product Z. The total revenue for all three product lines was £37,560,000 with total variable production costs of £33,936,000.The fixed overhead costs budget for the plant, regardless of output level is £2,400,000 a year. Total income (total revenue - total variable costs – fixed costs) for the year utilizing the original production budget equals £1,224,000 (Imanet, 2008). 2) According to our sales manager there is a limitation on producing any additional units of production. Department B does not have any additional production capacity due to lack of skilled labor workers which to hire in order to accommodate any additional manufacturing output. By performing a cost volume profit analysis of our...
6 Pages(1500 words)Essay

Compensation

...Compensation 0 Introduction This present paper provides answers to some questions that were drawn from the materials covered in The paper has two distinct parts; the first parts define five terms and it even provides an application example for each term. The second part provides answers to two different questions each focusing on different issues. 2. Definitions (Milkovich, 450-700), defined external competitiveness as the ability of local goods and services to sell in a foreign market at higher or competitive prices than those in the local market. The term benchmark job refers to a job that exists or is common across all industries in different countries. Expectancy theory stipulates that individuals will normally act...
3 Pages(750 words)Essay

Financial Compensation and Ethical Issues In Healthcare

...Mrs. Glenda Trudell ME120 Medicalinsurance Software Applications February 2, Financial Compensation and Ethical Issues in Healthcare The health care system faces challenges related to its workforce and the market forces. Issues regarding the workforce and the prevailing market forces are related and are faced with numerous ethical issues. Of concern, are the ethical issues relating to financial compensation and equity in the health care.It is important to carry out an analysis of the healthcare system and the ethical tenets that surround it in addressing these problems. There have been lots of restructuring in the healthcare system over the past decade. This move has...
2 Pages(500 words)Essay

Compensation

...in Kuala Lumpur. In the second phase of the study, questionnaires were administered to GIATMARA employees. The researchers set out to investigate employee participation in determining their pay and the extent to which the employees perceived their pay as adequate. The study concluded that a well-executed performance-based pay system leads to job satisfaction. A well-implemented performance-based pay system has at least two features: the employees participate in them and consider their pay adequate. Employee participation is achieved by encouraging employees in various job groups to take part in the design and administration of compensation systems. There is some evidence, albeit less compelling, that...
8 Pages(2000 words)Assignment
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 Term Paper on topic Limiting Financial Executives' Compensation for FREE!

Contact Us