...among America’s corporate executives. Janice White, formerly CFO of General Global, feels that by changing the companies pay policy to pay the CEO based on performance would increase stakeholder faith in the corporation. By being paid based on merit rather than by a market based industry standard would hopefully prove to the stakeholders including customers, employees, stockholders, and the public that she too was willing to take a loss if the company did not perform to expectations while under her control. While this seemed an admirable gesture, it raised many new questions for the board about exactly how to execute this change and what overall effect the change may have for the company itself. The board directors wondered if salaries of other executives should also be affected, if there should be a cap on yearly compensation, if they would loose an advantage due to loss of competitive CEO salary, or if the decision may ultimately cause instability. The ethical question here is should CEO’s be compensated based on a market industry standard or should they be compensated based on performance, and if so how does one develop guidelines for a performance based system? The nature of this article leans towards the fact that it can be difficult to relieve a company of a poorly performing CEO without an exuberant exit package to lure them out. One solution to this dilemma would be to develop a pay scale throughout the year with...
Words: 1260 - Pages: 6
...view of CSR is that the company must value their customers and give them a value product. Friedman’s view is that the money is important and corporations should capitalize among that. Rogers seems to be in the middle of the two but he has a strong view that the profits are important. I believe Rogers is the best view. This is because he mixes the two ideas together. He believes you should make profits but he also believes that treating customers with value is also important, and that is what makes his view most compelling. If you look at Friedman’s view you’d feel profits are over everything. “The social responsibility of business is to increase its profits” (Friedman). And an excerpt she gives from the Wealth of Nation "I have never known much good done by those who affected to trade for the public good” (Smith). Both of these quotes show the central viewpoint that Friedman holds. He feels it is not smart to just be concerned about treating people with value because that will get you nowhere. You have to make some profit. Now onto Mackey’s viewpoint, you can see the need for people to be valued. “I’m a businessman and a free market libertarian, but I believe that the enlightened corporation should try to create value for all of its constituencies” (Mackey). “The most successful businesses put the customer first, ahead of the investors” (Mackey). Both of these quotes show why Mackey believes his business is so successful. He feels because the employees, customers, suppliers and...
Words: 1244 - Pages: 5
... Bank CEO and the credit crisis was it related to each other? There is a statement which is ‘Bank CEO’s incentives were a major factor in credit crisis.’ First of I would like to explain a few terms in the topic. A CEO stand for Chief Executive Officer meanwhile, incentives here doesn’t only mean money or material incentives. It also includes motivation either positively or negatively towards the CEO. Therefore, the statement says that the lack or abundance of incentives to the CEO is the major factor for the past credit crisis. CEO incentives were not the major cause for the credit crisis based on my research from the journals and articles. I totally oppose these because I have gathered valuable evidences from journal and articles that I have read online. 1.1 Bank CEO Incentives There are several titles for the position Chief Executive Officer (CEO) such as Managing Director, Executive and President. The responsibility of CEO is different from one another according to their size, scope of work and an organization. CEO plays an important role by making a decision, hiring of staff. Besides that, CEO will have communication deal with board of directors and corporate operation of high strategy in large company. CEO incentives are given based on the CEO’s performance up to their level of achievement. Incentives are generally rewarded by cash or stock. They also compensated with some other benefits or increment in salary. 1.2 Credit crisis Credit crisis defines when...
Words: 1783 - Pages: 8
...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 payroll agencies that evaluate and determine...
Words: 10991 - Pages: 44
...كـليـة إدارة الأعــمـال College of Business Administration Written by: Abdalaziz Saad Alamry ID number: JAB083 Course code: HRM 450 Section number: (1) Subject: Research on “Is Executive Compensation Fair?” Is Executive Compensation Fair? Executive pay (also executive compensation), is financial compensation received by an officer of a firm. It is typically a mixture of salary, bonuses, shares of and/or call options on the company stock, benefits, and perquisites, ideally configured to take into account government regulations, tax law, the desires of the organization and the executive, and rewards for performance. Over the past three decades, executive pay has risen dramatically relative to that of an average worker's wage in the United States, and to a lesser extent in some other countries. 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. Executive pay is an important part of corporate governance, and is often determined by a company's board of directors. Types of compensation There are six basic tools of compensation or remuneration. * salary * short term incentives (STIs), sometimes known as bonuses * long-term incentive plans (LTIP) * employee benefits * paid...
Words: 3148 - Pages: 13
...Effectively Compensation Through Collective Bargaining Devita R. Ewell Compensation can be accurately defined as something, or a sort of payment, that is generally given or received, in return for a service rendered, or for any other reason. There are several different types of compensation, and one example is ‘worker’s compensation’, wherein the government forms a sort of state sponsored insurance for the workers of the state, which would provide benefits to the workers in case the worker suffers from disease, injury, or death. As far as human resources are concerned, compensation refers to the pay structures within any particular organization. Some of the primary issues regarding compensation are: how much is a company to pay a worker, in order to attract him, and then keep him, and then keep him completely motivated so that he does not move over to another company. Must the company offer to pay the employee a salary, or rewards? Must the company pay benefits to its workers, and if so, what must be the amount, and how exactly must it be paid? Can there be a distinct difference regarding the pay scale for high performers, as compared to that of lower performers? Would it be a better idea if the company were to provide stock options and stock bonuses for the employees of the company? It is a good idea for a company to create an excellent and practical compensation plan for their employees. The choices that are available are numerous, like for example...
Words: 3181 - Pages: 13
...registered nurses will eventually surpass the supply, due to the evolving census of an aging population. The paper agrees that reinvestment in the nursing profession is very important to assure a sufficient supply of nurses that will meet the likely predicted demands of the economy. Let's start in the early 1950s, when the idea or simple thought of becoming a nurse was considered and recognized as one of the most volunteered professions in society. The nurses would make beds and smile happily in the various faces of the different patients, as well as check temperatures. Today, this is somehow not the case, nurses play such an important part in our health care system now, that we have taken them for granted for too long and it is time we realize it by making those necessary changes. The largest group of health care professionals in the United States are composed of Registered Nurses and still we are faced with a huge decline all over the regions, especially here in Texas. In 2007 Texas had reported to have over 148,000 Registered Nurses; this was probably estimated around 610 nurses per 100,000 householders, as compared to the national statistic of 784 per 100,000. (Green et al, 2009). While attempting to analyze the problems and issues that have plagued the nursing shortages...
Words: 1126 - Pages: 5
...Table of Contents Case Summary 2 Affected Stakeholders 3 Ethical Dilemma 4 Why would a $500,000 salary cap prompt personnel to leave for other banks? 5 Was stripping of Lewis’ chairmanship a significant move on the part of BoA shareholders? 6 How could Thain justify spending $1.2 million on his office when Merrill Lynch was on the verge of bankruptcy? 7 What did Ken Lewis hope to gain by claiming that he was “pressured” into completing the Merrill Lynch deal? 9 Of all decisions made by Ken Lewis in this case study, which one do you think did the most damage to his reputation? And why? 10 What should Lewis have done? 12 Conclusion 13 References 14 Case Summary Bank of America (BoA), founded in 1998 is an American multinational banking and financial services corporation. They were notably a key player in the global financial crisis that struck in 2008. Ken Lewis, a former CEO acquired Countrywide Financial and Merrill Lynch. To his dismay, the acquisitions turned out to be disastrous as the first week of January 2009 enlightened the problems that existed within Countrywide Financial and Merrill Lynch; they were bankrupt with assets in their balance sheet that set a new mark for toxicity in the financial market. This required attention and direct aid from the Federal Government itself. However, following this month BoA fell by 65 percent. Just a month after the first quarter of 2009, Ken Lewis was made CEO and stripped off chairmanship by the shareholders’...
Words: 3144 - Pages: 13
...A Long Way to Equality A Long Way to Equality By: Tanyalynn Muna ETH Cultral Diversity 125 September 22, 2013 Sharon White A Long Way to Equality [Abstract] Over time the fight for equality in America has been fought by many different races, genders, and groups of people. Women have fought for things like the right to vote, work and be treated as equal individuals for more than a decade and though there has been a little head way in our society there are still some things women are looked over. The same could be said for the gay community. There are big issues that will touch on such as work, marriage, adoption, and opportunities that the gay communities have been discriminated against. A Long Way to Equality A Long Way to Equality For decades now women have been fighting for equality in many areas of life. Wethier it was the right to vote, equal opportunity in work environments or just to be treated as equals it has been a fight since at least the late 1700’s. Between the 1700’s early and the1800’s it was under common law that a woman leaving her husband not only had to give up her name but also all the property and belongs to her husband. It was as if all the work that women did to maintain a home was not good enough to be able to keep what was obtains during the marriage. In 1776 Abigail Adams wrote her husband in reference to the Deceleration of Independence reminding him that women “will not...
Words: 1368 - Pages: 6
...| 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
...candidates who are best qualified to make it through the “Super Saturday” final selection process in New York City. Recruiters focus on identifying candidates that possess the skills to succeed in the company’s day‐to‐day operations and have the personality to fit the organization’s culture. During the Super Saturday event, the thirty candidates are each interviewed by five senior bankers. Following the interviews, the senior bankers gather to determine which candidates should be extended offers. At this final key decision point, the recruiters focus on the candidate’s potential for growth. Sometimes the HR manager may try to push a banker to be more decisive about a potential candidate by saying, “If you could only take one new associate to the CEO’s office with you, which one would it be?” Or at the other extreme, “If I can’t place her, she’s going to be yours, how do you feel about that?” (Delong and Vijayarghavan, 2006, pg....
Words: 2161 - Pages: 9
...1. Executive Summary The positive economic growth recorded since 1994 by the new democratic South Africa is tainted by the widening wage gap between executives and average workers. This has made South Africa one of the most unequal countries in the world. Average Chief Executive Officer (CEO) remuneration increased by 11.5% a year from 2006 to 2009. An average worker would take 8 years to earn what a CEO earns in a 3 month period (Theuissen, 2010). Globalisation, company acquisitions and mergers make businesses more complex and challenging to manage. Companies seek to recruit the best managers who demand higher pay (Templetion, 2007). The involvement of the compensation committee in the setting of the CEOs remuneration may contribute to the higher pay for executives (Reh, 200- ). South Africa has a high level of low skilled labour. Skilled workers are in high demand to drive economic growth. Also, as technology continues to advance, more skilled workers are recruited to operate the high tech machines and they demand higher wages (Sill, 2002). The low wage paid to average workers and the large gap between executive compensation and average workers can have negative emotional effects. It also creates tension between employers and employees which may result in external reactions (Mc Clelland, 2008). Creation of value framework for the remuneration of executives and improved wage structures for the average worker will help narrow the existing wage gap (ASA, 2010). 2. Introduction...
Words: 4012 - Pages: 17
...GWD_TN_1 ------------------------------------------------------------------------------------------------------------ GWD1-Q1:D During her presidency of the short-lived Woman’s State Temperance Society (1852-1853), Elizabeth Cady Stanton, as she was a staunch advocate of liberalized divorce laws, scandalized many of her most ardent supporters in her suggestion that drunkenness should be made sufficient cause for divorce. A. as she was a staunch advocate of liberalized divorce laws, scandalized many of her most ardent supporters in her suggestion that drunkenness should be B. as she was a staunch advocate for liberalized divorce laws, scandalized many of her most ardent supporters by her suggestion of drunkenness being C. in being a staunch advocate for liberalized divorce laws, had scandalized many of her most ardent supporters with the suggestion of drunkenness being D. a staunch advocate of liberalized divorce laws, scandalized many of her most ardent supporters by suggesting that drunkenness be E. a staunch advocate of liberalized divorce laws, she scandalized many of her most ardent supporters in suggesting that drunkenness should be ------------------------------------------------------------------------------------------------------------ GWD1-Q2:B By merging its two publishing divisions, the company will increase their share of the country’s $21 billion book market from 6 percent to 10 percent, a market ranging from obscure...
Words: 7177 - Pages: 29
...Journal of Business Ethics (2009) 85:147–156 DOI 10.1007/s10551-008-9934-6 Ó Springer 2008 What’s Wrong with Executive Compensation? Jared D. Harris ABSTRACT. I broadly explore the question by examining several common criticisms of CEO pay through both philosophical and empirical lenses. While some criticisms appear to be unfounded, the analysis shows not only that current compensation practices are problematic both from the standpoint of distributive justice and fairness, but also that incentive pay ultimately exacerbates the very agency problem it is purported to solve. KEY WORDS: executive compensation, distributive justice, pay disparity, incentive alignment Introduction Few academic theories have been adopted as widely as the application of agency theory (Jensen and Meckling, 1976) to the structure of executive pay in modern corporations. After prominent suggestions that the inherent conflict of interest that exists between stockholders and corporate managers – or ‘agency problem’ – could be mitigated through the structure of managerial incentives (e.g., Jensen and Murphy, 1990a), the prevalence and size of stock option grants to senior executives have expanded increasingly and substantially (Hall and Murphy, Jared D. Harris, Assistant Professor teaches both Ethics and Strategy courses in Darden’s MBA program, and a doctoral seminar on corporate governance and ethics. His research centers on the interplay between ethics and strategy, with a particular focus...
Words: 6653 - Pages: 27
...Executive summary In this assignment I was able to use relevant leadership theories to critically analyse and evaluate the leadership of Jack Welch. I first provided a brief insight into Jack’s background, outlining what made John F. Welch into the man we know today as Jack Welch. Secondly, shed some light on the financial position and the culture of General Electric (GE) in the early 80’s when Jack assumed the mantle as its Chairman and CEO. Thirdly, I discussed his changing leadership styles over the years. Finally, I give my opinions on how I would have lead differently if I was faced with the same situations. Table of Contents 1. Introduction 5 2. Welch’s Background 5 3. The situation – GE before Jack Welch 7 4. Jack Welch the leader 7 5. Discussion – How I would lead differently 10 6. Conclusion 11 Reference List 12 1. Introduction Leadership is a complex concept and there are different ways of becoming a leader. Leadership is the process of influencing an organized group toward achieving its goals. (Hughes, Ginnett and Curphy, 2012). Leadership is about influencing and not dominating others, leadership occurs when other people happily accept the goals of as organization as their own (Hogan, 1994). Because the behavioural patterns of employees vary depending on their individual circumstances, it is important that leaders to develop an empathetic approach towards resolving the issues of employees. Leadership theorists associate this ability...
Words: 2873 - Pages: 12
