Executive Pay Term Paper

Pages: 3 (831 words)  ·  Bibliography Sources: ≈ 9  ·  File: .docx  ·  Level: College Senior  ·  Topic: Careers

Executive Pay

The Problem With Executive Pay

In recent years executive pay practices have come under scrutiny as more and more employees and boards are recognizing that executives may not be living up to the expectations placed on them when hired for the position they serve in. Corporate scandals and compensation abuses have recently come to light that have suggested executive pay is a weakness in many U.S. companies (Chingos, 2004).

There have been some federal bills passed to help mitigate the effects of executive abuses, including the Sarbanes-Oxley Act of 2002, which focused on strengthening auditing bodies within organization to help limit the potential abuses of executive officers (Chingos, 2004). However many of these bills have failed to address the shortfalls that exist with regard to executive pay. This paper will try to describe the shortfalls that currently exist with regard to executive pay and attempt to offer suggestions for correcting the situation.

Analysis of Executive Pay

There are many problems with executive pay. One point of criticism that is fairly common is the inequity that exists between gender pay for male and female executives. According to one research report, the gender pay gap that exists among top corporate executives "was significant" (Bowline, Renner & Rives, 2002). The report published by Catalyst, an organization known for promoting women's issues in business, stated that women are still paid only 68% of the pay that men are in equivalent positions with similar skills (Bowlin, Renner & Rives, 2002: 331).Buy full Download Microsoft Word File paper
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Term Paper on Executive Pay Assignment

Perhaps the largest criticism of executive pay has been excessive pay. Far too often executives are paid top dollar whether they produce results or perform up to the level of expectation (Bowlin, Renner & Rives, 2002). Studies also suggest that executive pay continues to rise despite a failing economy or other organizational shortfalls. A survey conducted in 2003 of CFOS showed that 44% expected their salary to rise regardless of economic setbacks, with less than 6% predicting a drop in their salary (Kell, 2004). In fact a majority, more than 62% usually, predict that their salary will increase from year to year (Kell, 2004). From a sensible perspective executives should plan to facing the same cutbacks employees would in the face of budget shortfall, however more often than not this is not the case.

Common Features of Executive Compensation Packages

Among the more common features of executive pay packages include stock options, which entitle the owner to purchase corporate stock for a fixed price (Griner, 1996). However… [END OF PREVIEW] . . . READ MORE

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"Executive Pay."  Essaytown.com.  May 20, 2005.  Accessed April 6, 2020.
https://www.essaytown.com/subjects/paper/executive-pay/9037089.