Executive compensation analysis-Is it Excessive - Essay Example

Only on StudentShare

Extract of sample
Executive compensation analysis-Is it Excessive

ncial Management of the company is one such domain where the management of the company can maximize the value for its shareholders by adopting various practices and policies which can help achieve them their highest goal. However there are also theoretical frameworks i.e. Agency theory which suggest otherwise that the managers and shareholders can conflict with each other when pursuing their individual goals and that the managers can engage into practices where they may take actions which may not help maximizing the shareholders value and rather work in their own benefits.
Executive compensation is one such domain where modern executives are largely being criticized for taking high compensations mostly on the pretext that money spent on their compensation could have been utilized for creating value for the shareholders.
This essay will look into how the financial management theories and practice can help managers to maximize the value for the shareholders and how it is achieved in practice besides providing a brief outline of how the managers may not, in practice, do things which can help maximize the value for the shareholders.
The issue of executive compensation needs to be viewed in the historical context of the way modern businesses developed. The era during 1990s saw a slow and steady increase in the overall median compensation of the CEOs from 1992 to 2000 increased from USD 2.335(m) to USD 6.549(m)- a general increase of 180%1 suggesting the direction of the overall increase in the executive compensation. (Murphy). Similarly, despite the overall decline in the performance of financial sector due to subprime crisis, Goldman Sachs CEO Lloyd Blankfein has been able to gross up a bonus of $70million which is 30% more than what he got in previous year.
The research conducted on the executive compensation subtly points towards the fact the executives exercise substantially degree of power over the board besides showing the attitude of grabbing opportunities at ...Show more

Summary

Since most of the companies are public in nature with large number of shareholders therefore it is very imperative that the mechanism should be in place to safeguard the…
Author : brisa56
Executive compensation analysis-Is it Excessive essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Executive compensation analysis-Is it Excessive"
with a personal 20% discount.
Grab the best paper

Related Essays

Is management remuneration too excessive
A LITERATURE REVIEW A literature review on the argument regarding the justification of the excessive salaries and perks offered to the higher management of companies against the services that they offer for the management the day to day affair and decision making.
12 pages (3000 words) Essay
The Debate on Executive Compensation
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 performance to the company rather than being a constant that is not moved by the financial constraints of the companies (Bertrand and Mullainathan 2001, p.62).
9 pages (2250 words) Essay
Executive Compensation Schemes Master Essay
Remuneration occupies an important place in life of an employee. His or her standard of living, status in the society, motivation, loyalty and productivity depends upon the remuneration he or she receives. For the employer too employee remuneration is significant because of its contribution to the cost of production.
12 pages (3000 words) Essay
Chief Executive Officers Compensation
Today, with the increasing researchers desires to demonstrate the importance of an effective human resource policy on organisation performance research has shifted from a micro level that previously dominated research interest to a more general, strategic macro level3.
8 pages (2000 words) Essay
Executive Compensation Schemes
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.
12 pages (3000 words) Essay
Executive Compensation Schemes Essay
With regards to this above mentioned information, this paper basically discusses whether or not an executive compensation scheme or also known as ECS are inherently flawed and also the disclosure requirements of the executive compensation scheme or ECS. The traditional and the particular view of ECS is only to attract to motivate and also to retain all the qualified personnel.
10 pages (2500 words) Essay
Executive Compensation
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
7 pages (1750 words) Essay
The Netflix Approach to Compensation. Case Study Analysis from a managing people for competitive advantage perspective
He employs other management practices that will enable employees to perform effectively in the business environment. This includes motivation and compensation practices, which have outstanding features. Netflix employs a compensation model that offers employee
8 pages (2000 words) Essay
Why executive compensation is out of control
The board of directors determines the amount of compensation received by an executive and forms a critical part of corporate governance in any organization (Reilly, 2010). In the recent past there has been a tremendous increase in the amount of compensation that executives
2 pages (500 words) Essay
Executive Compensation and WorldCom
Banks put pressure on him that the margin calls on his stock in the company, which financed his other businesses, be covered.
4 pages (1000 words) Essay
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT