Executive Compensation
The role of compensation in organizational behavior is an important one as it is used as a key tool by management to achieve social control over its employees (Pfeffer, 1997, p.102), the primary assumption being that compensation packages affect attitudes and behavior. This is seen as particularly true of executive level compensation on the grounds that management must be sufficiently motivated if organizational objectives are to be met and so that, they in turn, succeed in motivating the rest of the organization: "Because of the importance of money as a motivational factor, the compensation function is quite significant. Its performance involves developing a philosophy of what wages should be; developing theories as to the source of wages...relating compensation to individual jobs; arriving at individual differentials in pay...." (Megginson, 1972, p. 50)
Though compensation may undeniably be an important factor, several research studies have shown that the role of compensation may vary within the context of markets, organizational or individual behavior. For instance, the role of compensation in attracting and retaining employees and management talent was seen to increase in importance in the tight labor market of 1996-97 when wages and salaries grew at a pace not seen in many years. In addition, the increasingly competitive business environment of the last few decades has necessitated that organizations control labor costs, while focusing simultaneously on increasing productivity, quality, and enhanced...
In order to compare the executive compensation in both countries, the countries firms should be matched and compared according to industry, size and operation. The executive compensation can be measured or compared accurately according to the industry and firms sizes. From the data, it was found that the executive compensation in both countries were high whereas the firm performance was reducing. The data collection for the executive compensation in
Those days are likely over, for a variety of reasons, including shareholder concerns about the ever increasing dilution due to the issuance of options and new accounting rules requiring companies to expense options... In addition, studies have shown that the accounting cost of stock options exceeds employees' perceived value of those options. Finally, there has been a crisis in governance that has caused a reexamination of corporate accounting standards.
This talent does need to be retained. With respect to the executives who were involved in mortgage-backed securities, however, this argument holds little water. These are not talented individuals, as demonstrated by the substantial losses their actions have inflicted upon the company. They are not the sort of employees that the firm should be seeking to retain. It is only due to the outdated or erroneous perception that these individuals
Part of the reason for this, is because shareholders and the board of directors are allowing this to occur. To prevent the situation from becoming worse, shareholders and the board need to be more independent, by questioning the motives / actions of management. At the same time, there must be some kind regulations in place that can prevent the runaway abuses from occurring. If this kind of strategy can
Executive Compensation Programs and Incentives In 1996 the average salary plus bonus for CEOs was $2.3 million. After other benefits were added, this sum rose to $5,781,300. Beginning with Revlon executive Michael Bergerac who broke the $1 million mark in 1974, executive pay and bonus plans have soared to mind-boggling proportions. Although various governmental agencies have set limits on tax-deductible executive compensation, these efforts not only failed but served to raise
They are required to negotiate with the employers for more elastic contracts and provide incentive to the productive employees. The right-to-work laws generate economic exchanges. The enhanced demand for labor making the worker scarcer and therefore more worthy, results in out of the right-to-work laws. It is evident that the right-to-work laws entail benefit to the workers in crucial fields such as the availability of jobs. The right-to-work states
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