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CEO remuneration and a firm performance
Design & Technology
Pages 10 (2510 words)
JANUARY 2013 LONDON SOUTH BANK UNIVERSITY ACADEMIC YEAR: 2012/2013 MODULE TITLE: Research Methods Module Co-ordinator: Mr Yousuf Khan STUDENT: STUDENT Number: DISSERTATION PROPOSAL: EXECUTIVE REMUNERATION AND ITS CORRELATION TO A FIRM PERFORMANCE Chapter 1: Rationale for research The rationale of the research is based on the need to establish the role of stakeholders, legislation and executives in determining the executive remuneration.
Typically, it is a combination of salary, incentives, and shares of and call options on the stock of a company, ideally configured to consider the government rules and regulations; a company’s goals/strategy and its executive’s desires, tax law and recognitions for the performance. Executive compensation is viewed through the observable outcomes. It should be designed to give appropriate and befitting incentives. Many shareholders do not want or expect executives to take risk with an aim of getting large profit; in fact nowadays there is a significant emphasis on risk control and strengthening of audit committees to ensure that any risks are understood, assessed and managed properly. The financial collapse in 2007 has changed shareholders’ perception in the light of many ‘reckless’ actions taken by executives, particularly in the financial services sector. That is why the compensation of chief executive officers has increasingly been receiving a lot of attention. As basic salaries are not viewed as an adequate method of influencing the performance of the top executives, the other, different types of rewards were brought in. ...
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