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Executive Compensation and Performance

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The attached chart shows the growth of the average CEO pay over the period 1990 to 2005. The head of a typical public company made $ 9.7 million dollars in 2011. There are many who see too weak a link between CEO pay and performance. Others object to the gap between executive compensation and the average worker. In your research this week, explore either or both of these issues.

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Step 1:
The first study says that there is high relationship (40%) between the company size and CEO pay. According to the study, firm performance only accounts for (5%) variance in total CEO pay. The question it raises is whether there is a high relationship between CEO performance and pay? The source of this article is Journal of Management and is very reliable (a).

Step 2:
CEOs who are certified receive higher remunerations than non certified CEOs. The certified CEOs are ranked on the basis of firm performance These CEOs ...

Solution Summary

This solution explores executive compensation in three steps: the relationship between company size and pay, remuneration for certified vs. non certified CEOs, and the relationship between CEO pay and performance. This solution is 270 words with three references.

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CEO Compensation Case

Read Case 7, "CEO Compensation" (pages 254-255 in the Greer text), then answer all five questions on pages 255-256.

1. Explain the potential adverse impacts on strategy implementation when the CEOs of companies receive extremely high compensation.

2. Discuss the merits of the various recommendations for solutions to the problem of extremely high CEO compensation.

3. What non-regulatory pressures are most likely to bring excessively high CEO salaries more in line with realistic levels?

4. Evaluate the argument that pay for performance justifies the level of compensation paid to the CEOs noted in the example.

5.Evaluate the argument that the problem of excessive CEO compensation should not addresses through legislation.

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