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 both countries provides the detail information on the executive salary. Executive compensation can be divided into four main categories such as salary, bonus, benefits and long-term incentive plans. These benefits include the incentives like medical, life insurance, pension allowances plan and many other incentives. Bonuses and benefits are the short-term compensation and these are the part of the salary packages. The components of long-term incentive plans are the stocks and shares. The long-term incentive plans or the stock base compensation is the largest part of united state executive. This incentives plan is same for Canada. The Canadian firms contain over 90% stocks options and this percentage is increasing every year (Sapp, Southam). There are many other factors which influence on the compensation comparison of two countries like U.S. And Canada. These factors are the differences in tax laws, regulatory and monitoring system of stock option and the cultural differences. These differences can be neglected because it highlights the comparison of the United State and Canada due to the fact that taxation and monitoring system are almost the same. The Americans tolerate the inequality more then Canadian because Americans focus on the benefits, efforts and talent. The Americans firm rewards the talented personnel by providing the share base compensation. It can be concluded that the executives compensation difference in both countries are not much high.
Another interesting way to approach the two countries compensation comparisons is to compare the pay-performance sensitivity. The pay-performance relationship depends on the economic regulations and it affects on the firms performance. The higher executive compensation raised the public concerns and inequality issues. Therefore due to public concerns, U.S. did not disclose the executive compensation to the public. As it has been stated earlier that U.S. executive compensation base on share or stock option. This resulted in the higher and attractive long-term executive income as compare to other countries in the world. The aim of this stock option is to encourage the executives financially and maximize the share holder profit. The Canadians have implemented the same practice in past and they disclosed the executive compensation to the public also. Studies have shown that the pay-performance relationship is positive for the Canadian firms. There is a commission for the executive compensation in Canada which was obtained from firm's proxy statements. It was required to disclose the payments to executive officers. These data were obtained from the samples of 365 Canadian firms and observed 1183 cases. Similarly the financial data for the executive compensation was obtained from annual report. They took compensation samples from the 675 U.S. firms and total observations made were 2159 (Zhou, 282).
How executive compensation changed in last 25 years
The most effective researches were made after the 1992 because the data of executive pay are easily available executive compensation data base. This data base reports the compensation of firm's highest paid officers. The executive compensation value reduces from about $0.9 millions to $0.75 million from 1950 to 1975. It followed every year in last 25 years averaging reduction were 0.8% per year (Frydman, Saks). This compensation level started to increase in mid 70s at higher rates. Compensations were consisted of salaries and bonuses in last 20 years. As it has been described...
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.
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
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
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
The Perils of Executive CompensationIntroductionExecutive compensation acts as an incentive for CEOs to enhance an organization�s performance and is common practice across industries. Michael Eisner was famously rewarded handsomely via executive compensation for his stewardship of Disney in the 1990s (Downes et al., 2007). Elon Musk has even more famously accrued substantial personal wealth via executive compensation for meeting targets related to Tesla�s share price (Jones, 2021). While executive compensation
Executive Compensation Sometimes it seems that the salaries executives make at big corporations are entirely out of proportion with the value added to the firm by their being on the payroll. It makes sense that if someone, anyone, makes a certain wage, then they should be making at least that much money for the company. If someone is pumping gas for $7/hr, then he should be pumping at least $7
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