Cengagebrain Case Analysis

In “The Overpaid CEO” Susan Homberg and Mark Schmitt bring to attention how CEO pay in America is ridiculous in numbers as opposed to other parts of the world. Looking back, in the nineteen hundreds CEO pay was relativity average. As businesses and companies began to expand there was a demand for higher pay. Between 1978-2012 CEO pay increased by 875%! Many rules and regulations were put in to place to limit the pay of a CEO, such as the Securities Exchange Act that I will explain later on, regardless CEO pay kept getting higher and higher as many loopholes were found. Bonuses pay a large part in the salaries of CEOS’, as an effect CEOS’ tend to partake in risky behavior in order to score those big paychecks.

Compensation systems can take on many forms, all of which have positives and negatives related to it. However, certain components are noted to be determinants of solid compensation plans. One agreement of a solid compensation system is the use of incentives. “Clearly a successful companies set objectives that will provide incentives to increase profitability” (Needles & Powers, 2011). Incentive bonuses should be measures that the company finds important to long-term growth. According to Needles & Powers (2011) the most successful companies long term focused on profitability measures. For large for-profit firms, compensation programs should offer stock options. The interweaving between the market value of a company’s stock and company’s performance both motivate and increase compensation to employees As the market value of the stock goes up, the difference between the option price and the market price grows, which increases the amount of compensation” (Needles & Powers, 2011). Conclusively, a compensation plan should serve all stakeholders, be simple, group employees properly, reflect company culture and values, and be flexible (Davis & Hardy, 1999; The Basics of a Compensation Program).

Bonuses of managers could be paid out in shares which they are obliged to keep for a certain time period, e.g. 5 years. That way the share price on the long term is of importance for the managers and the goal of the shareholders is aligned with the goal of the managers. However, the share price is dependent on much more factors than the performance of just one manager. There is a risk that managers would feel they have little to none influence on the share price and still make risk full decisions. Another possibility would be determining the bonus of a manager on their performance in the long run, e.g. 5 years. A combination of these two bonus

Things just did get better for some bankers who will get a bonus off the recent US bailout - I don't know how they regulate it in other countries. I, like many, don't understand how CEO's walk away from dying companies with tens of millions. How is that legal? What are their Higher CEO's thinking? It is a mean puzzle to contemplate.

Take severance packages for example. When the average employee in no longer benefitting the company, chances are they will be let go. Besides a final paycheck for hours worked and the possibility of unemployment collection, they do not receive anything else from the company. When a CEO is no longer performing up to standards, they are forced to resign but walk away with much more than a final paycheck. Chuck Prince of Citigroup was shown the door after the company lost $64 billion in market value, yet he left with $68 million and a cash bonus of $12.5 million (Nickels, McHugh & McHugh, 2010). Not only are CEOs paid a substantial amount more for their work, they are paid a substantial amount more to leave the company all together. In 2009, President Obama and Congress put limits on executive compensation of firms receiving money under the federal government bailout programs. The payout to CEOs leaving their companies was limited to $500,000 but it wasn’t for all companies across the board. This new limit only applied to companies who had borrowed money from the government during periods of economic downfall and hadn’t yet paid it back. Despite the decrease in monetary payout, CEOs were still allowed a decent portion of restricted stock which amounted for a fairly large payout when the stock could be sold a few years down the line.

It is clear from the review of the corporate budget that the executives are earning very high bonuses without complying with the promises that were

Van Gogh got excited over the look of these trees and painted them. Some of his paintings of the trees represented life, others represented how he felt about Christ in Gethsemane, and others represented a combination of both of these things. An example of an art piece that had a lot to do with religion was Olive Trees with Alpilles in the Background (Fig. 6). This piece was painted with Christ in Gethsemane in mind. He wanted to create a piece that used a more purer and serence sense of nature without using religious imagery. With this piece “he wanted to show it was possible to paint the meaning of Christ in the Garden of Olives, the garden of Gethsemane where Christ prayed the night before his crucifixion, without aiming straight for the historical Garden of Gethsemane.” Vincent had done religious paintings before, he actually painted Christ in the arden of Olives twice before, but both times he decided not to paint the images of Christ since, as he said in a letter to his brother Theo, he did not want to “do figures of such importance without a model.” Van Gogh actually had begun to avoid doing religious work around this time for both aesthetic and moral reasons. Van Gogh had rejected what he believed to be his parents’ narrow religionious views and went for a much different view, one where life itself almost didn’t seem to matter of have purpose, something close to Nihilism. Vincent instead tried to find meaning in the cycles of nature and how they related to the

Directors have awarded compensation packages that go well beyond what is required to attract and hold on to executives and have rewarded even poorly performing executives. These executive pay excesses come at the expense of shareholders as well as the company and its employees. Furthermore, a poorly designed executive compensation package can reward decisions that are not in the long-term interests of a company. Excessive CEO pay is essentially a corporate governance problem. When CEOs have too much power in the boardroom, they are able to extract what economists' call "economic rents" from shareholders (Economic rent is distinct from economic profit, which is the difference between a firm's revenues and the opportunity cost of its inputs). The board of directors is supposed to protect shareholder interests and minimize these costs. At approximately two-thirds of US companies, the CEO sits as the board's chair. When one single person serves as both chair and CEO, it is impossible to objectively monitor and evaluate his or her own performance.

Executive Compensation. I’m in agreement with Thomas Piketty that the one cause of rising inequality in the United States “the rise of supersalaries” for top executives (Piketty & Goldhammer, 2014, p. 298). The average American estimates CEO to worker pay ratio at about 30-to-1, which is more than 4 times what they believe to be ideal. The career review site Glassdoor reported from 2014 data that the average pay ratio of CEO to median worker was 204-to-1 and that at the top of the list, four CEOs earn more than 1,000 times the salary of their median worker with the very top pay ratio of 1,951-to-1. In some cases a CEO makes in one-hour what it takes the average employee six-months to earn. In comparison, the Washington Post reported for the

Aging brings many behavioral, physiological and psychological changes in human. As many older adults surpass young adults they experience deterioration in cognitive abilities such as memory loss, inability to perceive, reason, and understand as they age. In human brain, capacity is involved in person’s ability to understand and interpret the information presented to them. According to the text book Adult Development and Aging: Biopsychosocial perspective Canadian edition (2015), capacity is referred to as a context-dependent and fluid because, a person may lack capacity for making complicated decision, but they still may have a capacity to outperform simple decisions and their cognitive abilities may diminish as they age (Whitbourne, Whitbourne, & Konnert, 2015, p. 62). In the construct of capacity for any research project, a researcher must receive an informed consent in order to

This report explores the issue of the pay that top executives make, and the reasons why they do. It also suggests improvements that can be made to make the system better. High Pay Seems Small When Compared To Company Profits Many companies pull in profits that are extremely high. When an employee of such a companies salary is compared to the amount of profit that the company earns, it starts to seem reasonable. It only makes sense that if the employee is directly responsible for the success of their company, then they deserve to get their payback. It seems ironic, but many salaries even look small once compared with a companies profits. Top Executives Are Under A Lot Of Pressure Being the CEO of a

Compensation in these organizations has many faces. Employee compensation may look quite a bit different that that of the executives, and certainly different from that of the stockholders/shareholders of the organization. The following is a proposal of how a compensation philosophy might look for a Fortune 500 Company:

Read the discussion case "Executive Compensation" on pages 190-192 then answer/discuss questions 1-7 that follow.

Aforementioned, it’s unclear what cultural or identified behavioral influences contributed to the Yahoo malvertising incident as the perpetrators weren’t publically identified. Culturally, crime rates are closely linked to the lack of financial opportunities. (Kshetri, 2010). In general, there are psychological and sociological drivers of cybercrime. Malvertising is a prevalent anonymous threat and to understand a person’s intention and motivation one must first analyze their psychological background and social environment. The attackers, also known as unethical or black hat hackers, are thrill seekers who break into systems to satisfy their inquisitiveness, they’re intrigued by the challenge of knowing they “can” infiltrate a system thereupon emerging their technical skills. (Fötinger & Ziegler, 2004). Sometimes, when they meet their challenge it intensifies into addiction where other factors come into play such as financial gain.

Those same 25 executives announcing the layoffs had just one week earlier paid themselves "retention bonuses" of $55 million" (Diekmann, 2005). These employees did not show or use ethical business conduct by making sure they themselves received pay; they are just as guilty as the top executives involved with the accounting scandals.