Executive compensation do these guys deserve
| Citation | Sources | Views | Words | Pages | Essay # |
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| MLA | 8 | 34 | 1899 | 6 | 36060062 |
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Since the enactment of FASB Statement No. 123-R, companies have moved towards different forms of compensation. However, the period in which options became popular re-set the bar in terms of the size of executive compensation. Thus, we see that compensation today remains at very high levels. In 2007, the average salary for an S&P 500 CEO was $10.5 million (Pentilla, 2009). The question we need to answer is whether or not that is too much. In order to do that, we will set aside for a moment the issue of aligning executive and shareholder objectives and analyze the issue from a simple economic perspective
In theory, executive compensation should be driven by supply and demand. Firms compete with one another to attract and retain top talent. This argument has been used by some of the banks to justify paying out bonuses this past year. One expert on the issue of executive leadership, however, has found that the market for CEOs does not adhere to this traditional economic principle. Rather, the CEO market more resembles a closed ecosystem in which selection decisions (are) based on highly stylized criteria that often (have) little to do with the problems a firm (is)
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