Ceo’s and Upper Management’s Acceptance of over Compensation Are Unethical During Times of Financial Struggle Within Organizations
CEO’s and Upper Management’s Acceptance of over Compensation Are Unethical during Times of Financial Struggle within Organizations Financial Management
Abstract
This essay discusse s the overpayment of CEOs and the effects these high base salaries have on businesses. Understanding that well compensated CEOs are generally quite productive and well deserving; there are those that seem to drop the ball and the business suffers. CEOs are hired in with contractual compensation packages, which do not give stipulations to cover incidents such as decreases in stock value, company downsizing, or bankruptcy. Many argue that CEOs are not compensated enough for the pressures they endure, that they are generally they first to receive pay cuts when the company is facing financial distress, and in some cases are first to be dismissed in order to save others in the lower echelon. Because of these compensatory packages given when hired, when the company’s financial stability is no longer solid, the CEOs are still guaranteed pay increases and incentives that they continuously accept. The Board of Directors may believe that their hands are tied and still feel obligated to compensate for past performance, or feel the need for continuous compensation for the purpose of retaining the employees. Regardless of their reasoning, the Board of Directors, are under pressure to make cuts that trickle down to the average workers. I will present, and offer support for my argument, that top executive’s over compensation is unethical during times when the company is in a financial struggle.
CEO’s and Upper Management’s Acceptance of over Compensation Are Unethical during Times of Financial Struggle within Organizations
There is one topic that almost always seems to spark a controversial discussion. It appears that this particular topic is what a great deal of people believes to be playing a major part in America’s economical decline. The topic issue that comes to mind is
Abstract
This essay discusse s the overpayment of CEOs and the effects these high base salaries have on businesses. Understanding that well compensated CEOs are generally quite productive and well deserving; there are those that seem to drop the ball and the business suffers. CEOs are hired in with contractual compensation packages, which do not give stipulations to cover incidents such as decreases in stock value, company downsizing, or bankruptcy. Many argue that CEOs are not compensated enough for the pressures they endure, that they are generally they first to receive pay cuts when the company is facing financial distress, and in some cases are first to be dismissed in order to save others in the lower echelon. Because of these compensatory packages given when hired, when the company’s financial stability is no longer solid, the CEOs are still guaranteed pay increases and incentives that they continuously accept. The Board of Directors may believe that their hands are tied and still feel obligated to compensate for past performance, or feel the need for continuous compensation for the purpose of retaining the employees. Regardless of their reasoning, the Board of Directors, are under pressure to make cuts that trickle down to the average workers. I will present, and offer support for my argument, that top executive’s over compensation is unethical during times when the company is in a financial struggle.
CEO’s and Upper Management’s Acceptance of over Compensation Are Unethical during Times of Financial Struggle within Organizations
There is one topic that almost always seems to spark a controversial discussion. It appears that this particular topic is what a great deal of people believes to be playing a major part in America’s economical decline. The topic issue that comes to mind is
References: Megginson, W.L., & Smart, S.B. (2008). The Scope of Corporate Finance. Introduction to Corporate Finance (2nd ed.). Mason, OH: South-Western Cengage Learning. Heilman, J. (2008). Pain in the Gulliver. Corporate Leader Daily. Retrieved from http://www.corporateleaderdaily.com/column/3/24013.html Hawkins, J. (2007). Study Uncovers Big Gaps in Employee and CEO Perceptions of Management Performance. Business Wire. Retrieved September 22, 2008, from http://library.atehns.edu.2065/pdqlink?did=1397541091&Fmt=7&clientID=35895&RQT=309&VName=PQD Reuters (2008, September 22). CEO Pay Pressure Builds Due to Wall Street Bailout. Retrieved September 22, 2008, from http://www.reuters.com/article/newsOne/idUSN2228338220080922?sp=true