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Pros And Cons Of Executive Compensation

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Running head: EXECUTIVE COMPENSATION 1 EXECUTIVE COMPENSATION 5 Executive Compensation Hieu Le Columbia Southern University Executive Compensation Executive compensation is the financial package that an organization rewards to their key leader based on his/her skills, experience, talent, and contributions to the firm. Additionally, the executive compensation commonly divides into five different categories include annual salary, performance bonuses, stock options, contingent financial incentives, and future vesting equity. Although executive compensation motivate leader to maximize his/her performance to an organization, many critics argue that this financial incentive is an unethical conduct, and may create a …show more content…

Mathematically, the CEO salary is 373 times more than the non-supervisory worker, which shows a major difference in a pay-scale level. Equally, Mullaney (2015) insist that Marissa Mayer, CEO of Yahoo, awarded nearly 45 million dollars along in 2014, and Nicholas Woodman, founder of GoPro claimed more than 77 million dollars in the same year. To address the integrity of executive compensation, the Security Exchange and Commission has intended to require all large firms explain their financial incentives give to their CEOs and other key leaders in the publics (Mullaney, 2015). Furthermore, executive officers of large corporations randomly to use a backdating method to maximize their stock option value. Generally, SEC does not require companies the date of issuing stock options until months later. Thus, managers could elect any date within this period to get a lowest price of stock in order to maximize its value in the future (Avci, Schipani & Seyhun,

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