Hrm 450 Term Project
كـليـة إدارة الأعــمـال
College of Business Administration
Written by:
Abdalaziz Saad Alamry
ID number:
JAB083
Course code:
HRM 450
Section number:
(1)
Subject:
Research on “Is Executive Compensation Fair?”
Is Executive Compensation Fair?
Executive pay (also executive compensation), is financial compensation received by an officer of a firm. It is typically a mixture of salary, bonuses, shares of and/or call options on the company stock, benefits, and perquisites, ideally configured to take into account government regulations, tax law, the desires of the organization and the executive, and rewards for performance. Over the past three decades, executive pay has risen dramatically relative to that of an average worker 's wage in the United States, and to a lesser extent in some other countries. Observers differ as to whether this rise is a natural and beneficial result of competition for scarce business talent that can add greatly to stockholder value in large companies, or a socially harmful phenomenon brought about by social and political changes that have given executives greater control over their own pay. Executive pay is an important part of corporate governance, and is often determined by a company 's board of directors.
Types of compensation
There are six basic tools of compensation or remuneration. * salary * short term incentives (STIs), sometimes known as bonuses * long-term incentive plans (LTIP) * employee benefits * paid expenses (perquisites) * insurance
In a modern corporation, the CEO and other top executives are often paid salary plus short-term incentives or bonuses. This combination is referred to as Total Cash Compensation (TCC). Short-term incentives usually are formula-driven and have some performance criteria attached depending on the role of the executive. For example, the Sales Director 's performance related bonus may be based on incremental revenue growth turnover; a CEO 's could be
College of Business Administration
Written by:
Abdalaziz Saad Alamry
ID number:
JAB083
Course code:
HRM 450
Section number:
(1)
Subject:
Research on “Is Executive Compensation Fair?”
Is Executive Compensation Fair?
Executive pay (also executive compensation), is financial compensation received by an officer of a firm. It is typically a mixture of salary, bonuses, shares of and/or call options on the company stock, benefits, and perquisites, ideally configured to take into account government regulations, tax law, the desires of the organization and the executive, and rewards for performance. Over the past three decades, executive pay has risen dramatically relative to that of an average worker 's wage in the United States, and to a lesser extent in some other countries. Observers differ as to whether this rise is a natural and beneficial result of competition for scarce business talent that can add greatly to stockholder value in large companies, or a socially harmful phenomenon brought about by social and political changes that have given executives greater control over their own pay. Executive pay is an important part of corporate governance, and is often determined by a company 's board of directors.
Types of compensation
There are six basic tools of compensation or remuneration. * salary * short term incentives (STIs), sometimes known as bonuses * long-term incentive plans (LTIP) * employee benefits * paid expenses (perquisites) * insurance
In a modern corporation, the CEO and other top executives are often paid salary plus short-term incentives or bonuses. This combination is referred to as Total Cash Compensation (TCC). Short-term incentives usually are formula-driven and have some performance criteria attached depending on the role of the executive. For example, the Sales Director 's performance related bonus may be based on incremental revenue growth turnover; a CEO 's could be
References: Books * Lucian Bebchuk and Jesse Fried, Pay without performance: The Unfulfilled Promise of Executive Compensation (2006) * Bebchuk, Lucian; Grinstein, Yaniv (April 2005). "The Growth of Executive Pay". Harvard University: John M. Olin Center for Law, Economics and Business. Newspaper articles * Sean O 'Grady, 'Economist Stiglitz blames crunch on 'flawed ' City bonuses system ' (24.3.2008) The Independent * Louise Story, 'Windfall Is Seen as Bank Bonuses Are Paid in Stock ' (7.11.2009) New York Times * '"Chief executives ' pay rises to £2.5m average ' (4.8.2005) The Guardian