Integrate information from Phase I and Phase II, assess the situation, and conduct further research. Your professor must be satisfied that the feedback on premise has been used in the formulation of t

Final Project Phase 2: Prospectus

Aaron Bryant

Shorter University

Final Project Phase II: Business-Related Research Premise

Background

Executive compensation is the financial and non-financial awards given to executives and other high-ranking officials with in corporations. These awards typical come in the form of base salary, annual incentives, and long-term incentives, and perquisites such as personal use of corporate aircraft, company cars, and business expense accounts (Cormany, 2017). Compensation for executives has steadily increased over the years but there have been dramatic jumps in pay since the 1970s. The latest dramatic increase was in 2010, when executive compensation increased 11% (Cormany, 2017).

The board of directors are legally and morally responsible for monitoring and awarding executives and company leaders. In many cases they help decide what compensation is given to executives. To help with the contract decisions about executive pay, a compensation consultant firm may be hired.

This business proposal is aimed at comprehending the reward scheme based on actual results in a company. Different workers substantially differ from normal pay package for compensation of either the salaried management and the professionals or the hourly paid workers.

Research objectives

The business-related premises research is built on an understanding on the executive compensation. The United States security exchange commission requested the public companies to unveil information on how the executive compensation determines its amounts. There are different stipulated forms of compensations. These forms of payment have been put to the public and acts as a template used by different companies as a form of comparison for the compensation plans.

According to the facts based on the dramatic increase on the executive compensations, there have been attempts made to increase the customer- stakeholder value. It is a plan set to bring up the target ownership plans. The plans are meant to bring up a way of improving the state of compensation in the company. The target ownership is defined as giving each executive a target of shares, issued to the company stock that they can own.

Over the history, it has never been so strict to give any form of penalty to those that do not meet the shares target. The discovery on accounting manipulation gives the reason for a higher likelihood for restating earnings. The companies have to ensure that the executives hold the equity positions.

This research has got the main objective of forming a resolution that will approve the different forms of executive compensation packages. On the debate on how the shareholders can increase their shares, the executive has been issued with the mandate to vocalize their pay packages.

Managerial Relevance

Many corporations use compensation consultants to help figure out how much to compensate their executives. If a consultant firm helps an executive increase his/her compensation, they can be later hired for more billable hours as compensation in return. So, intern, does the hiring of compensation firms increase executive compensation.

Theoretical Framework

The hiring of compensation consultants and the increase in compensation of executives are related. The technique used in realizing the design used in determining the best executive compensation structure can be highlighted by volumes of theoretical concepts that implies various punch lines on the compensation plans. The plan seems fragmented and lacks consensus which can be observed between the lines of finance and economic.

For the purpose of improving excusive conceptualization, a perfect dimension undermining the human elements required to compound the problem on executive compensation. Most companies require the concept of economic utilization on the agency theory which is given a critic on the fact that using the same theoretical tracks with the same methodology gives an incapable point of examining the human element as a form of social interaction. Social interaction is majorly built in the political and sociocultural contextual setting. On this realization, there is need to omit the human element when determining the criteria used to determine the executive compensation.

The conceptual framework does not include all the broad range of discipline represented by the compensation plans. The framework is a vivid plan that outlines the differences between the theories on executive compensation and that which is mentioned on literature. Sure enough, it is a complex phenomenon that cannot be realized in a particular model. Its required therefore to understand the main objective behind the compensation framework. This framework answers the question, how does it answer the development pattern on the compensation plan.

The conceptual framework specifies two objectives which includes; to comprehend the input issued based on different theoretical modes which offer to apply the terms of conceptualization used in executive compensation. Another objective desired in conceptualization is to issue a simplified framework for executive compensation.

Another theoretical framework in this case is the cognitive theory. The cognitive framework recognizes the executive compensation as a psychological process used to determine the components of the calculations.

Equity theory on the other end applies at individual levels and at the team levels. This kind of theory applies that the employees seek compensation in relation to the ratio to their inputs and outcomes. The ratio means that the inputs provides the comparison onto which the employees are to be compensated.

The executive compensation also depends on the structural theory which argues the fact that it is organized on an organizational level. The executives earn more compensations based on hierarchy in a systematic manner similar to the superior economic models.

These theoretical frameworks describe the facts based on the elements to be considered when determining the function to executive compensation. The factors to be used might sometimes be compromised by some physical or economic factors such as basic constraints such as low profits in the company. The ways of interpretation depend on the person’s ability to understand the economies of scale as outlined by the company.

Research Methodology and Design

A non-contrived case study using minimal interference will be used in this study.

Scope of Study

Several strategies have been established to reform or rather limit the compensation plan as per the post -2008 financial collapse and the trouble asset relief program. The study has to include research based in the governmental regulations. Such regulations can include the restrictions on tax, say-on- pay vote requirements and even parachute compensation.

There is need to understand the various methods that can be used to determine the criteria to be used to recover compensation issued for unperformed pay. Some other companies utilize the standards of compensations disclosure giving them to issue the compensation based on votes (say on pay).

The government also have a place in determining the executive compensation through rules guiding the changes regarding the board’s ad stakeholders in a company. Such rules can include the tax and regulation for pay to cut the additional pay in an organization. It is therefore prudent to consider that the board of directors need to provide an insight over effectiveness and leadership oversight.

Limitations

According to Greckhamer (2011) compensation is any form of tangible services or financial returns given as a form of benefit on top of their normal renumeration as a part of an employment terms of relationship. It is therefore a hierarchical way of scheming employees. It is based on the annual bonus issued to embers of a company. It is sometimes challenging to determine the forms of compensation which are either termed as fixed or variable payments.

Considering all other forms of compensation and incentivizing on the top-level management, there are other limitations that can arise based on the payment form. To begin with, the cash compensation is usually taxed as income thus can be rated as part of the highest tax brackets giving a better reason for other compensations on top of the normal salary.

The renumerations also depends on the incentive stock options which is guided under strict rules and guidelines on the corporate’s levels making it quite difficult to get offered to companies.

In conclusion, compensation requires keen understanding on some of the issues discussed in the above proposal and should give further directives based on research guideline. The guidelines in some extent, the executive usually become so biased on the rates of compensation. This however comes to happen due to the fact that they might be improperly compensated thus giving the reason for no incentive to issue.

References

Cormany, D. L. . P. candidate. (2017). Executive Compensation. Salem Press Encyclopedia. Retrieved from http://proxygsu-sho1.galileo.usg.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=ers&AN=89550569&site=eds-live&scope=site

SEC Proposes New Rules for Compensation Committees and Compensation Consultants 31 March 2011

Gretchen Morgenson, "Executive Pay, Hiding Behind Small Print," New York Times, Feb. 8, 2004

Gerald T. Garvey and Gordon Hanka, "Capital Structure and Corporate Control: The Effect of Antitakover Statutes on Firm Leverage" Journal of Finance 54 (1999): 519–520;