...Shareholders Watchdog, Inc. 777 Wall Street New York, NY 10005 December 7, 2011 RE: Is CEO Compensation Fair? Dear employee, Accompanying this letter is our completed report that discusses the issue of the fairness of current CEO compensation. Although there are two sides of this argument, recent legislation and regulations for reform tend to support those who believe it is unfair. We have evaluated the current standards of CEO compensation and examined why both sides think they should prevail. There are some advantages that strongly support CEO’s huge salaries, including the following: * Provides incentives and motivates the CEO to obtain or surpass corporate objectives * Retains key-value leaders for the long-term, resulting in consistent corporate success * Creates a strong CEO confidence for him/her to reinvest in the corporation (bonds) Our overall research indicates that CEO compensation does not reflect actual performance in most cases. Many CEO’s are grossly over compensated (including stock options, bonuses, hedge funds, and other benefits). The “Golden Parachute” guarantee adds insult to injury. Based on our research, conducted from the UNLV Library periodicals database and online sources, we recommend the following: * Require corporations to adhere to sections 951, 953, 955 and 956 of the Dodd-Frank Bill * Maintain a collective (“Esprit de corps”) work force environment for all employees * Consult third party professional...
Words: 10991 - Pages: 44
...The Debate over CEO Compensation Analyzing Managerial Decisions: The Debate over CEO Compensation 1. Do you think the fact that most American CEOs are paid so much more than rank-and-file employees suggests CEOs are overpaid? Explain. I do not believe that just because American CEOs are paid much more than rank-and-file employees suggest that they are overpaid. Many CEOs whose salaries and compensation packages are discussed in the news are the CEOs from the largest American corporations and likely do not represent the average American CEO. Also, many times when CEO payouts are discussed in the news it is not a one year payout but instead a multi-year payout. Plus, many companies need to pay high salaries and incentives to attract successful CEOs from other companies. This alone drives the overall salary and compensation packages for CEOs but does not necessary point to them being overpaid. 2. Japanese CEOs generally receive much lower levels of compensation than CEOs in the United States. Does this imply that U.S. CEOs are overpaid? I do not believe that just because Japanese CEOs receive much lower salaries than United States CEOs implies that they are overpaid. I worked for Honda and one item that I learned in the past years is that there are large differences between the American and Japanese cultures. The Japanese very much frown upon employees that leave their companies. Japanese employees barely ever transfer companies unlike American...
Words: 944 - Pages: 4
...| CEO Compensation | | | | Jade Duan | 5/12/2012 | | INTRODUCTION Over the past a few decades, executive pay has risen dramatically in the United States. As of 1960, the average CEO at a large corporation made approximately $190,000 (equivalent to approximately $1.3 million today). The 1990s saw one of the greatest wealth transfers in history, as CEO pay skyrocketed. S&P companies CEO pay went from 1993 average of $3.7 to $17.4 million in 2000 [1]. In 2010 the highest paid CEO was Viacom's Philippe P. Dauman at $84.5 million in 9 months [2]. Motorola CEO, Sanjay Jha, pay package rose to $47 million in 2011, almost four times of his 2010 pay about $13 million [3]. As CEO compensation continues to soar while workers’ pay stalls, today, the average CEO makes 411 times more than the average worker (Figure 1). The explosion in executive pay has become controversial and criticized. The idea that stock options and other alleged pay-for-performance are driven by economics has also been questioned. Figure 1. Ratio of average CEO Pay to average production worker compensation in America Observers differ as to whether this rise is a natural and beneficial result of competition for scarce business talent that can add greatly to stockholder value in large companies, or a socially harmful phenomenon brought about by social and political changes that have given executives greater control over their own pay. "Today the idea that huge paychecks are part of a beneficial...
Words: 5460 - Pages: 22
...CEO Compensation Thoughts on the current state of executive compensation practices in the US: Current state of Executive compensation within the US differs from different compensation practices within the forms it takes, laws and regulation it's subject to, its dramatic rise over the past 3 decades and wide go criticism leveled against it. Within the past 3 decades in America government compensation or pay has up dramatically on the far side what is often explained by changes in firm size, performance, and trade classification. It’s the very best within the world in each absolute term and relative to median earnings within the America. It has been criticized not solely as excessive, however conjointly for "rewarding failure" as well as large drops available value. Observers dissent on what proportion of the increase in and nature of this compensation may be a natural result of competition for scarce business talent benefiting investor price, and the way abundant is that the work of manipulation and self-dealing by management unrelated to produce, demand, or reward for performance. While our government compensation attorneys perceive the elaborate, technical aspects of government compensation legal problems and governing laws, they tend to conjointly perceive market practices and trends. They tend to facilitate our purchasers establish and perceive the key legal risks in a very industrial context so they will build familiar business selections. They tend to closely monitor key...
Words: 735 - Pages: 3
...Compensation Final: Three Essays Mr. Music MGT 320 April 27, 2011 1) Essay Question # 2: Issues of CEO pay that managers need to understand. CEO Pay Overview It seems as though no matter how bad the economy gets or how poorly a company performs, the Chief Executive Officer (CEO) (and other top executives) always come out in the best possible position, especially with compensation. Besides lavish compensation packages and best possible amenities, the CEO’s generally enjoy large severance packages or “golden parachutes”. Severance packages are basically contractual deals between the CEO and the corporation that in case the CEO is terminated for some reason or leaves the company, he/she is entitled to a specific sum of money on departure. Golden parachute is a term used to describe rich severance pay packages which in addition offer cash bonuses, stock options and benefits – essentially a complete and wealthy severance pay package. (Carroll & Buchholtz, 2009) The purpose of these packages was logical for industries prone to mergers, acquisitions or failure – it would protect the CEO in case the company experiences any of the above. Nevertheless it increased the moral hazard problem and the principal-agent problem within organizations. Basically the rationale has a fallacy where it protects the CEO and his/her pay if the company should fail, merge or be acquired but it doesn’t protect the company if the CEO performs badly and decides to bail out when the company is taking...
Words: 4626 - Pages: 19
...CASE STUDY: The Debate over CEO Compensation The most visible and highly paid person in most corporations is the chief executive officer (CEO). CEO compensation is particularly important to firms for three reasons. First, the compensation package is likely to be important in attracting and retaining good CEOs. Second, the form of the pay contract is likely to help determine whether the CEO focuses on value maximization or some other objective. Third, employees throughout the organization carefully follow their CEO’s pay. Important morale problems can occur when employees think that the CEO is overpaid. For instance, employees complain bitterly when they are asked to take pay cuts because the company is in trouble, yet at the same time the CEO gets a big raise. Controversy over CEO pay has increased substantially in recent years. One charge is that the level of CEO pay is too high. CEO pay is so huge that people don’t believe they deserve it. It is easy to pint to many ECOS who report compensation in the millions of dollars (reported compensation figures typically include salary and bonus payments, as well as gains from the exercise of stock options). Consider the following two examples. Investors were outraged when E Trade Group Inc. disclosed it had paid out a $77 million compensation package for CEO Christos M. Cotsakos in 2001- a year in which the financial-services company lost $242 million. When Cotsakos pledged later to return $21 million, the complaints...
Words: 517 - Pages: 3
...Introduction Security of employment is one of the most prevalent issues between the employer and his employees. The unions try their best to cope with the problems and follow the guidelines within the contract binding on all union members established under the collective bargaining agreement. The cases below will be analyzed and conclusions will be made based on the research of the facts provided and questions provided in this case study. Questions to be answered are the following: Case #11- Steven Goldberg and Uranus Umbrella Company a. How would you advise Uranus? b. How would you advise Steven? c. Should the union get involved? d. Is there a reasonable accommodation to be made? Case #12-Skidmore and Swift Company a. Was this situation unfair to Skidmore? b. Should this work arrangement continue if employees feel this strongly against it? c. Is there an ethical issue on the part of the employer? The employee? Case #11 Issue: This case involves the issue of whether a violation of collective bargaining agreement will occur if accommodating a shift adjustment request by an employee. Rule: The rule states that in order for a violation of a collective bargaining agreement to be an unlawful practice, it must have compromised an employee’s contracted rights, such as seniority and shift preference in order to accommodate the religious beliefs of a particular employee. This presents an undue hardship for the employer (Moran, 2014). Analysis: ...
Words: 977 - Pages: 4
...Executive Officer compensation compared to the average employee’s compensation has substantially grown. In America, these ratio have grown from a ratio of 24:1 in 1965 to 40:1 in 1980 (Mackey, 2009) to even over 300:1 ratio in 2018 (McGregor, 2018). In this paper will consider following four questions: Is it ethical for CEO to be paid so much more? Is this a valid reward distribution system? Should companies consider ways to reduce the gap? Are upper management salaries subject to ethical considerations? Ethicality of CEO Compensation The goal of having a high CEO compensation is to retain and motive the proven highly successful leader who is capable of commanding increase...
Words: 846 - Pages: 4
...请查阅国内外相关文献，对高管薪酬影响因素方面的文献做简要评述（500-1000 字） 。 评述的主要内容包括： 文献中主要从哪些角度研究了高管薪酬问题？(2) 影响高管薪 (1) 酬的主要因素有哪些？(3) 现有文献中有关高管薪酬决定因素的研究中，已经比较一致 的观点有哪些？尚存争议的观点有哪些？ 2. 统计分析各个一级行业（SIC）在各个年度上的平均 CEO_compen，并作简要分析； 3. 在每个年度上，分别根据营业收入 (Sale)、负债率、ROA 和 Salegr 将样本分成两组： High 和 Low 组。 统计基于不同指标分组后两组公司的 CEO_compen 的平均值； 计 (1) (2) 算两组均值差异，并采用 t-test 检验均值差异是否显著。 （提示：t-test 可以使用 ttest 命 令，亦可使用外部命令 ttable2 或 ttestplus 等） 。表格形式如下： 分组指标 Sale Leverage ROA Salegr High Mean1 Mean1 Mean1 Mean1 Low Mean2 Mean2 Mean2 Mean2 difference Mean1-Mean2 Mean1-Mean2 Mean1-Mean2 Mean1-Mean2 t-value*** 4. 设定线性回归模型， 被解释变量为 CEO_compen (在第二次作业中已经定义了这个变量)。 (1) 解释变量可以根据你查阅的文献自行设定，说明你选择的变量反映了哪些方面的影 响（如经营业绩、资本结构、资产结构、行业特征、年度特征、公司治理、经理人个人 特征等）？(2) 对于选入的每个解释变量都要给出变量的定义、计算方法以及所参考的 主要文献。(3) 样本的筛选过程和离群值的处理方法需要详细说明。 提示：建议设定如下模型形式： CEO _ compenit a 1 X it s t it (1) 其中，CEO_compenit 表示公司 i 在第 t 年的高管薪酬，X 为一系列你认为可能影响高管 薪酬的解释变量， s 表示 S–1 个行业虚拟变量（基于上次作业中定义的一级行业分类变量 SIC 产生） t 表示 T–1 个年度虚拟变量吗， it 为干扰项。 ， 5. 基本统计量的呈现。呈现模型中涉及的所有变量的基本统计量（Mean, SD, median, min, max, N） ，并将结果输出整理到 word 文档中，并作简要分析。提示：建议使用 tabstat 命令进行统计，进而配合使用 logout 命令输出到 Excel 中，稍作整理后贴入 Word。 1 6. 变量的相关系数矩阵。 使用 pwcorr 或 pwcorr_a 命令计算文中核心变量的相关系数矩阵。 要求：小数点后统一保留三位有效数字；分别用***, **, * 标注 1%, 5%, 10%显著水平。 7. 回归分析 1。以回归模型 (1) 为基础，请呈现如下三种设定下下的回归结果： (1) 模型中仅包含 X；即仅考虑一般意义上的解释变量； (2) 模型中同时包含 X 和 s ；即进一步考虑行业虚拟变量，或曰行业特征； (3) 模型中同时包含 X, s 和 t ；即同时考虑行业特征和年度特征； 请简要分析你的结果。 （要求：采用 esttab 命令呈现上述三列结果，整理为 word 表格；系数估计值保留小数 点后三位； 括号中写 t 值， 保留小数点后两位， 标准误的计算采用异方差稳健性标准误； 分别用***, **, * 标注 1%, 5%, 10%显著水平。 ） 8. 回归分析...
Words: 316 - Pages: 2
...implemented, particularly for executives. In this paper, we are going to discuss the incentives of four different CEO from Pharmaceutical Industry. Pfizer Merck & Co Bristol-Myers Squibb Vertex 2012 Revenue $59B $47B $21B $1.5B 2011 Revenue $65B $48B $19B $1.0B CEO Read Frazier Andreotti Leiden Base $1.75M $1.5M $1.6M $1.0M Annual Incentive $3.4M $2.5M $3.8M $2.1M Annual LT Incentive (Stock and Stock Options) $12.9M $7.1M $10.9M $2.5M Perks/Other $175k $0.06M $808k $0.01M Vested/Exercised Shares $5.6M Approx. Total $25M $11.1M $17.2M $5.7M According to the Proxy statements, both Pfizer and Mereck have approximately 90% of their compensation as variable, based on company performance. The large discontinuity between the two companies is mostly due to the vested or exercised shares of Pfizer’s Ian Read. Excluding this amount, the companies’ compensation plans are generally aligned with their comparable sizes and company performance. Pfizer offered the largest incentive-based payout to it’s CEO in 2012, justified by the company exceeding two of three performance metrics despite key patent losses and the leadership Read showed throughout the year. Merck ranked their CEO performance as high in a tough environment, but due to a low internal scorecard results and shareholder return rankings Frazier was awarded a lower amount of variable compensation than in 2011. Overall, both of these industry leaders seem to have incentive programs aligned with company and shareholder...
Words: 1322 - Pages: 6
...DETERMINANTS OF CEO COMPENSATION: EVIDENCE FROM MALAYSIAN BANKING INDUSTRY CHONG KOK CHIEK (AC082799) MUHAMMAD AZWAN BIN MOHD ARIFFIN (AC082868) SITI SUHANNA BINTI ABDUL GHANI (AC083010) BACHELOR OF ACCOUNTING (HONS.) COLLEGE OF BUSINESS MANAGEMENT AND ACCOUNTING UNIVERSITI TENAGA NASIONAL 2012 DECLARATION We hereby declare that this project is our original work except for quotations and citations which have been duly acknowledged and that it has not been previously and/or concurrently submitted for any other degree at Universiti Tenaga Nasional and/or other institutions. CHONG KOK CHIEK AC 082799 MUHAMMAD AZWAN MOHD ARIFFIN AC 082868 SITI SUHANNA ABDUL GHANI AC 083010 Date of submission: 13th August 2012 i ACKNOWLEGDEMENT We would like to express our sincere gratitude to our project supervisor, Mr. Wan Mohammad Taufik bin Wan Abdullah, lecturer of Department of Accounting of Universiti Tenaga Nasional, for his valuable advices and continuous guidance throughout the research process. Mr. Taufik spent a lot of time enlightening us on various issues, giving us a comprehensive view in the academic aspect via our meetings within his busy working schedule. It is our pleasure to have him as our project supervisor. Without his unconditional support and care, our project could not be finished effectively. He let us try different approaches with confidence in the process, assisting us to solve a lot of problems especially at the time when we did...
Words: 15228 - Pages: 61
...employees, you have been asked to evaluate different compensation strategies that are available for adoption within your organization. Compare and contrast at least three compensation strategies and determine recommendations for how they may be implemented within your organization. Name: Henry Rivera I.D. #: 000318961 Reference Title Finding #1 Godfrey, W. (2013, January). Compensation Strategy for Success. Prezi. Retrieved from http://prezi.com/j9k9_m_2qiwn/compensation-strategies-for-success/ Sager, Suzanne. (2011, September). Merit Pay Most Often Used in Compensation in Public and Academic Librarians. Library Worklife. Retrieved from http://ala-apa.org/newsletter/2011/09/01/merit-pay-most-often-used-in-compensation-for-public-and-academic-librarians/ Ojimba, E. (2004, November 15). Salary Basics – Developing a Strong Compensation Strategy. Salary.com for Business. Retrieved from http://www.salary.com/Small-Business-Advice/advice.asp?part=par410 Finding #2 McGladrey. (2011). Lessons from Recession Increasing Focus on Incentive Compensation Programs. Retrieved from http://mcgladrey.com/Perspective/Lessons-from-recession-increasing-focus-on-incentive-compensation-programs University of Wisconsin – Green Bay. (2013, April 9). Compensation Philosophy. Retrieved from http://www.uwgb.edu/hr/documents/CompPhilosophy0401.pdf Finding #3 Gerhart, B., Milkovich, G.T., & Newman, J.M. (n.d.). Compensation Strategy. Answer, McGraw Hill. Retrieved from http://mhanswers-auth...
Words: 2629 - Pages: 11
...CPDC The CPDC (Cost per Double Click) designates the amount paid to the affiliate for a click on a link or on an advertiser's graphic element, followed by another click on the advertiser's site. CPM CPM stands for cost per thousand impressions (M is the Roman numeral for a thousand). This means the advertiser pays for every thousand times the advert loads on the publisher’s page. This is how a campaign is normally priced when brand awareness or exposure is the primary goal. The advertiser and the publisher negotiate a fixed amount that the advertiser will pay for every 1,000 times an ad is shown. CPM is a very simple payment scheme, assuming the two parties can agree on a method for counting impressions. There are often stipulations in the agreement, such that the ad can only be shown on certain pages of the publisher’s site, or can only be shown on pages with a limited number of other ads. In a CPM relationship, the publisher is primarily concerned with maintaining a high-quality audience that has well defined interests or characteristics. The advertiser is primarily concerned with creating a message that will be noticed by their target audience, because they pay for the impression whether or not the user actually sees the ad. In general, the more knowledge a publisher has about a particular audience, the higher the CPM that can be charged, because the advertiser is able to more clearly know who their message is being delivered to. One prominent...
Words: 1695 - Pages: 7
...Total Compensation Methods Paper Total Compensation Methods Paper In all businesses, a company needs to make sure that their turnover ratio is maintained while, at the same time, keep their best employees. Compensation and benefits are just two ways that a company can do such things. The company must know what each individual is looking for at the same time. Not all employees want the same thing. Some employees want the steady 40 hour 5-day a week salary job, while others may want 4-day weeks and more paid time off. By providing a proper balance of all items such as compensation, benefit programs, and salary, the administration of the company can keep their excelling employees and may not have to worry about a huge turnover ratio. Compensation Methods “Compensation is a systematic approach to providing monetary value to employees in exchange for work performed. Compensation may achieve several purposes assisting in recruitment, job performance, and job satisfaction.” (HR Guide to the Internet) In this type of economy, many businesses will start to freeze wages and stop giving their employees any type of compensation. However, this may hurt the employee morale. By giving out a reward for an excellent job performance at times, a company could see a bigger profit in this rough economy. There are a few different types of compensation methods. These methods include but are not limited to the following: • Commission • Overtime • Bonus • Expense Allowances ...
Words: 1149 - Pages: 5
...Bailey DeVry University Professor: Patricia Meunier-Muenks HRM-430-67386 Compensation & Benefits Compensation Challenges for Wisconsin Electric April 16, 2016 Executive Summary The point of this paper is to look at the compensation challenges inside of Wisconsin Electric (WE Energies) and make a pay methodology that will benefit the organization, as well as the representative. With the steady change in today's business world, to have an upper hand makes it troublesome for managers to pull in and hold the most skilled representatives. Recognizing the organization's compensation procedure guarantees the organization offers the right pay and pay increases in compensation to keep top employees. When we hear the word compensation we consider paying a worker for their work performed, however, there is substantially more to compensation. Compensation and benefits, "incorporates not just compensation, but also the direct and indirect rewards and advantages the representative is furnished with consequently for their commitment to the organization. To decide compensation, companies should build up a pay and compensation program that diagrams a fair process for repaying workers" ("Compensation and Benefits," n.d.). This approach is a critical piece in helping HR to deal with staying aggressive and successful in the worldwide business sector. All through this paper we will talk about the compensation and benefits methodology of WE Energies and recommendations on the most proficient...
Words: 2089 - Pages: 9
