Executive compensation & social wealth
Aditya Sinha
Corporate Governance – Final Project
Is there evidence that rewarding senior executives on the basis of measure accounting and/or market performance induces them to generate more wealth in total for society as a whole? What are the pros and cons of using statistical correlation between measured performance and compensation as evidence to support the idea that performance based compensation is a good policy to help increase wealth in society?
C-level compensation has always been a hot button issue in the business community, especially if you ask the shareholders. There is a greater want and need for debate and transparency on this issue than ever before, as the world economy is barely getting over the effects of the last recession in 2008. These days, there is greater agitation from shareholders that eventually spills over to the board, when a CEO’s pay is not in accordance with his performance or the performance of the company. Shareholder primacy may have been the goal of the past, however, business does not operate in a vacuum and is a sum total of its constituents which includes the society in and around which the business operates in. It would be interesting draw parallels between executive compensation and the level societal wealth generation, and to see if CEO’s compensation are actually commiserate with their actions towards society.
Through this paper, I will hope to investigate if compensating executives on the basis of market performance or accounting standards does in fact push them work towards generating greater wealth for all stakeholders in question – namely society (for the purpose of this paper we will assume society to encompass both internal and external
Aditya Sinha
Corporate Governance – Final Project
stakeholders, in an effort to gauge if the wealth created on average is reflective of the compensation). Additionally, I will also
Corporate Governance – Final Project
Is there evidence that rewarding senior executives on the basis of measure accounting and/or market performance induces them to generate more wealth in total for society as a whole? What are the pros and cons of using statistical correlation between measured performance and compensation as evidence to support the idea that performance based compensation is a good policy to help increase wealth in society?
C-level compensation has always been a hot button issue in the business community, especially if you ask the shareholders. There is a greater want and need for debate and transparency on this issue than ever before, as the world economy is barely getting over the effects of the last recession in 2008. These days, there is greater agitation from shareholders that eventually spills over to the board, when a CEO’s pay is not in accordance with his performance or the performance of the company. Shareholder primacy may have been the goal of the past, however, business does not operate in a vacuum and is a sum total of its constituents which includes the society in and around which the business operates in. It would be interesting draw parallels between executive compensation and the level societal wealth generation, and to see if CEO’s compensation are actually commiserate with their actions towards society.
Through this paper, I will hope to investigate if compensating executives on the basis of market performance or accounting standards does in fact push them work towards generating greater wealth for all stakeholders in question – namely society (for the purpose of this paper we will assume society to encompass both internal and external
Aditya Sinha
Corporate Governance – Final Project
stakeholders, in an effort to gauge if the wealth created on average is reflective of the compensation). Additionally, I will also