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Compose a 2500 words essay on Executive Compensation Schemes. Needs to be plagiarism free!Download file to see previous pages... The Tournament theory on the other hand further supported this view and
Compose a 2500 words essay on Executive Compensation Schemes. Needs to be plagiarism free!Download file to see previous pages...
The Tournament theory on the other hand further supported this view and also suggested that, a small and a minute difference in ability basically leads towards the high compensation. In simple terms, this definition basically fails to consider the main and the important significance of the executive compensation scheme or ECS in the overall governance of the organizations, for instance how and why these kind of different bonuses are basically awarded and what actual benchmark is used. ECS have basically four main and important components which are
All the stock options are normally based on the company's overall performance. Although the presentation and the features of the stock option is usually vivid and clear, the exact amount of the compensation can also be unclear as the amount could have been set many years ago and the share prices may also have changed. Furthermore, the executives may circumvent this in order to improve their performance with the help of accounting decisions in the earlier years before the turnover, which basically increases the reported results, or with the help of income-smoothing practice, which basically borrows the income from the future. Bonuses are basically shown separately to the share options in the company proxy statements. Although the cash compensation and all the other types of the compensation are disclosed separately in different other places like footnotes it is therefore termed as the complexity of the separation that can usually cause the reports to be more unclear for all the shareholders long term interest. This basically suggests that the executives wield at least some kind of pressure on both the level and also on the structure of their compensation. For instance most large US firms have a well organized remuneration committee which basically consists of two or more two outside directors. Although all the major decisions which are related to the top-level compensation are passed through this organized committee, the committee then rarely conducts the market studies of the competitive compensation levels or the initiates or they proposes new ECS or the executive compensation schemes. (Bolton &. Dewatripont, 2005)
In a research which was carried by Standard &. Poor's Executive compensation database data stated and concluded that the compensations may be higher due to the weaker corporate governance. This basically suggests that the managerial power can basically lead to the use of an ineffective executive compensation scheme or the ECS which consists of the compensation schemes that weaken or can also distort the incentives and therefore can also reduce the shareholders value. This on the other side also suggests that the top executives in the modern company cannot be always trusted.