The compensation package achieved Sunbeam’s goals of maximizing shareholders wealth. It motivated Dunlap to drive up the price of the stock. Although the short term profits benefited shareholders, no incentives to create a long term, profitable company existed. In fact, it gave Dunlap an even bigger incentive to sell the company once the stock price reached a high, favorable value. Dunlap’s compensation package consisted of little to no risk and had a ten year term. The restricted stock rewards became vested in two years. His purchase of 244,898 shares indicated that profits would drastically increase. Dunlap’s compensation package affected thousands of employees at Sunbeam. The compensation package favored shareholders but disfavored employees. They had no value in this model. The compensation package only protected shareholders wealth. The structure of Dunlap’s compensation package was aligned his views of shareholder primacy. He sacrificed values for a boost in stock price and economic efficiency. The stockholders of Sunbeam greatly profited, and Dunlap reaped a majority of the benefits. The compensation package should relate to performance in order to produce the right incentives. The compensation package provided Dunlap with an excessive amount of shares of stock and stock rewards, but at least it provided an…
Should SaskTel be privatized? (literature on public ownership, privatization, theories on the role of government)…
With the employees having that particular common interest with the shareholders, it can result in the shareholders gaining an advantage as the employees would be motivated to work hard in order to keep their jobs and allow the company to have a hefty profit…
When government contract with private companies to perform what was once considered to be the traditional work of government, it is termed as privatisation. Privatisation is occurring at a rather impressive speed in United States. For example, there are over 100 privatised prisons in the country (Kissane, 2007). Other forms of privatisation occurring in United States include privatisation of schools, military plane maintenance, state welfare and employment agencies and hospitals. Privatisation has become a very controversial topic in the country due to its wide range of advantages and disadvantages.…
The impact that the prospects of deprivatization have on investment by managers of privatized firms is that these managers will come to a realization that additional investments are prone to more risks in respect to the potential payback. In this situation, the time frame for returns on investments is shortened immensely. The uncertainty stems from the longer time frame, which results in managers hesitating from entering as a private firm. If this notion of deprivatization is upholded upon organizations, the owners will potentially lose any gains they may possess.…
If a firm uses a minority share ownership plan, external shareholders own it with a minority of employee owners, usually no more than 5% of the firm. Management or the board of directors exercises control of the firm and there is limited employee participation. While a significant number of employees may own shares in the firms they work for, almost all of this stock is in firms that are only minority employee-owned. In this essay I intend to explore the causes and consequences of firms choosing to use minority employee share ownership plans.…
The primary goal of a publicly-owned firm interested in serving its stockholders should be to…
It would be highly important for shareholders to connect closely as is possible to management and the available information about employee performance, and the compensation for that performance. I would recommend encouraging executives to make business decisions that will benefit shareholders’ by offering incentives for meeting performance goals. For instance, offering stock options as an incentive could discourage top-level management from keeping profits or bonuses acquired from sell of company…
A way of aligning management goals to shareholder’s interest is to tie managerial compensation to the market value of the firm’s stock.…
Privatisation will allow the everyday business man to invest in the company. This means that there will be a boost to the current economy. As well as this it will give the general public an interest in the running of the business. Nevertheless could you not see this as…
2. Presentation on Disinvestment, as presented by the Union of India at the OECD CONFERENCE on Privatisation, Employment and Employees, 10-11 OCTOBER 2002, Turkey, Last visited on September 7th, 2011).…
firms. This study is designed to compare the financial and operating performance of pre and post…
Privatization, also spelled privatisation, may have several meanings. Primarily, it is the process of transferring ownership of a business, enterprise, agency, public service or public property from the public sector (a government) to the private sector, either to a business that operate for a profit or to a non-profit organization. It may also mean government outsourcing of services or functions to private firms, e.g. revenue collection, law enforcement, and prison management.[1]…
Effective PPPs recognize that the public and the private sectors each have certain advantages, relative to the other, in performing specific tasks. The government’s contribution to a PPP may take the form of capital for investment (available through…
Private companies are accountable to their shareholders who are able either to disinvest in the companies and industries consistently under perform their private sector counterparts in terms of productivity, profitability and service quality. (www.thebudgetspeechcompetition.co.za)…