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Executive Compensation: the Ethical and Impact Challenge

In: Business and Management

Submitted By MARidgeway
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Pages 7
Executive Compensation: The Ethical and Impact Challenge

Executive Compensation: The Ethical and Impact Challenge Executive compensation is defined as the reward given to corporate executive employees for their job performance. Corporate executive employees are the higher echelon company employees and may include the chief financial officers, chief executive officer, upper level managers and the company president. Executive compensation mostly consists of base salary, bonuses, long-term incentives benefits, and prerequisites whose main purpose is to motivate the executives to steer the company to profitability and make decisions with the best interest of the organization. Executive compensation has been on an upward rise especially within the last few decades reaching to unprecedented levels. Worse still, executive employees’ salaries and benefits have increased at a significantly higher rate as compared to other employee’s compensation consequently raising controversy not only of the ethical issues but on issues of equity and efficacy of the high compensation in motivating the executive’s performance. The paper thus posits that the increased executive salaries are not only unethical but are not a reflection of executive performance nor are they correlated to executives performance and as such other options of motivating executive employees should be explored. Other employee motivations such as through psychological contract, organization motivation and employee development should be sought especially with the increased use of teams in management in volatile environment.
Types of executive compensation Executive compensation consists of the base salary, bonuses, and long-term-incentives such as...

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