Executive Collaboration

Introduction

Due to recent debate on executive remuneration, companies have been placed under mounting pressure to disclose their executive compensation practices. It has become a quintessential corporate governance issue about which there are many different views and opinions. The debate on executive remuneration can be approached from various angles some argue that aligning pay with performance is the optimal pay structure in order to reduce agency costs; others view it as a regulatory issue with the objective of remedying any system flaws; while some say it is a public policy concern. The following is an attempt to critically analyze the process in which companies determine the reward packages of their most senior executives.

The
All organizations have specific goals and targets to be met and senior executives are there to ensure that those goals are achieved. They all formulate policies and direct the overall operations of businesses and corporations, public-sector organizations, nonprofit institutions, and other organizations. Top executives oversee budgets and ensure that resources are used properly and that programs are carried out as planned, they encourage business investment, and to some extent promote economic development in their communities by extension their role is to execute capital-raising strategies to support a firm 's expansion, and deal with mergers and acquisitions. The nature of the responsibilities of high-level executives can be so intense with the pressure to succeed that rewarding them with such high salaries and benefits would be a major contributor to attracting and retaining them. To secure top level executives they should be highly paid. It is said that the recent global economic crisis was due to these huge rewards given to executives but top executives compensation did not cause the financial crisis. Instead, the crisis was caused by loose monetary policy, a global capital glut, over-high leverage at investment banks, mandates from the U.S. Congress to provide mortgages to people who could not afford them, not the executives’ level. Consistent with this, the financial crisis has spread to other institutions in other countries with very different pay practices. The risk involved at the level of senior executives can be so high that providing the incentives to attract the best in their respective fields is absolutely necessary. Senior executives for the most part assume and are liable to many risks and tend to lose large amounts of wealth and even their jobs when their companies perform poorly so on the basis of such risk these executives are worth what they are paid. These risks