Case Study Of Qualcomm

Describe the characteristics of the industry in which Intel operates. How is Intel positioned in the industry?

This paper provides an overview of the current debate and the theories that attempt to explain executive remuneration disclosure. Attention is given to underlying accounting theories such as Positive Accounting Theory, Normative Accounting Theory, Stakeholder Theory, Legitimacy Theory, Institutional Theory, Public Interest Theory, Capture Theory and Economic Interest Group Theory.

According to Martocchio (2016), there are two groups of employees recognized by the Internal Revenue Service (IRS), namely, executive employees and non-executive employees. The unique element that distinguishes the executive compensation from non-executive packages is the emphasis on long-term rewards over short-term rewards. Although the Dodd-Frank Act focuses chiefly on overhauling the U.S. financial regulatory system, it contains several provisions that apply to setting executive compensation. The Say-On-Pay provision requires organizations to avail a resolution to shareholders that requires them to endorse, in a non-binding advisory vote, the remuneration of the entity’s named executive officers (Bainbridge, 2010). Then, to the extent that any “golden parachute”-related compensation is not approved as part of the Say-On-Pay vote, the Act

“The Act reviews the powers and structure of the Securities and Exchange Commission (SEC), credit rating organizations, and the relationships between customers and broker-dealers or investment advisers” (David S. Huntington, Paul, Weiss, Rifkind, Wharton & Garrison LLP, 2010). It provides corporate governance and executive compensation reforms, such as proxy access, chairman and CEO disclosures, broker discretionary voting (Corporate Governance); say-on-pay, say-on-golden parachutes, broker discretionary, compensation committees, executive compensation claw backs (Executive compensation). In order to be active and operational, these provisions require further action by the SEC, the stock exchanges or other regulators except the say-on-pay, say-on-golden parachute and broker discretionary voting requirements. Most of

Federal governance in executive pay is essential to a stable and healthy economy. I offer that the issue of Federal governance in executive pay is bigger than equity in compensation. “Taxpayers and politicians and others disapprove of these levels of compensation precisely because the leaders of these firms, in the words of Treasury Department officials, nearly caused the financial system worldwide to collapse.”

However, there have been many cases where the CEO and executive officers receive outrageous compensation even when the companies suffer. Overall, there is a wide disconnect between the incentive of the executives and the financial performance of their company, which needs to be fixed. By passing regulations and rules such as the Dodd-Frank Act, there is hope of shedding light on the connection between the company’s performance and the executives pay. Although it will provide a clear insight, it will not be able to set a strict regulated compensation or define what an executive should earn. Instead regulations will allow for more transparency for the shareholders regarding corporate governance issues such as executive pay. Along with that, it will force companies to take accountability for their actions. If they do poorly, then the executives should be paid less, and vice versa. Overall, there should be a direct alignment between executive pay and the company’s

I agree with the advisory votes provision of the Dodd-Frank Act, because it serves as a valuable means of gauging the pulse of the collective shareholders’ interests. Since executive compensation is an important tool intended to align the interests of both the corporation and the shareholders, a system of assessing the shareholders’ interests is necessary – without it, the shareholders’ interests are in many ways left to speculation. Given the varied geographical locations of the shareholders and the regulations governing their ability to interact with one another, the advisory votes mandate affords the shareholders a collective voice and provides the board of directors with valuable feedback.

Executive Compensation is typically structured to incentivize executives to achieve company performance consistent with increases in shareholder value. As a result, a majority of executive pay is contingent on performance. If the company or the executive fails to perform, the pay may never be received. Corporate Governance is the system of principles and processes by which a corporation is managed that defines the relationships among the board, shareholders, management and other stakeholders in a manner designed to promote long-term growth in share price. Specific to executive compensation, the Center believes that a board-centric approach to corporate governance is best and that consistent with that approach, best practices should ensure that compensation decisions are aligned with the best interests of shareholders and other

Verizon Wireless is utilizing many ways to create its current culture. By implementing a mandatory training program for executives, the process of cross-train along with problem solving, and solutions being presented to a board, has set the example for training on all levels (Freifeld, 2012). Verizon has dedicated a plan to choose top performing graduates and enroll them in an internship, which aids in the employment of intelligent and career centered employees who also care about customer service. This training along with employee recruitment meets both the role modeling, training, and coaching process along with the organizational goals and performance criteria. Verizon has developed steps to hire and train at a challenging level.

Directors have awarded compensation packages that go well beyond what is required to attract and hold on to executives and have rewarded even poorly performing executives. These executive pay excesses come at the expense of shareholders as well as the company and its employees. Furthermore, a poorly designed executive compensation package can reward decisions that are not in the long-term interests of a company. Excessive CEO pay is essentially a corporate governance problem. When CEOs have too much power in the boardroom, they are able to extract what economists' call "economic rents" from shareholders (Economic rent is distinct from economic profit, which is the difference between a firm's revenues and the opportunity cost of its inputs). The board of directors is supposed to protect shareholder interests and minimize these costs. At approximately two-thirds of US companies, the CEO sits as the board's chair. When one single person serves as both chair and CEO, it is impossible to objectively monitor and evaluate his or her own performance.

As Murphy (1998) rightly points out, CEO compensation has become one of the most debated issues in the recent past. A lot of research in this field has been conducted to determine the relationship between CEO pay levels with the corporate performance, firm size, board vigilance, CEO’s human capital, tenure & age. But the results of these researches are not very hopeful and have yielded conflicting results. This review aims at understanding these relationships and also tries to provide an ethical perspective on CEO compensation.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 gave the right to the shareholders to be able to approve the executive compensation for a company, in this case the Kroger Corporation. However, this is only on an advisory basis which is nonbinding. Meaning, if Kroger so chooses, it may not follow the executive compensation decisions made by the shareholders. Ultimately, the power to set the executive compensation is given to the Compensation Committee. Kroger wishes to retain the best management possible, and it does so through competitive pay. Kroger believes that a significant amount of the pay should be based on performance and the proportion of responsibility held by the executive. They also believe compensation should

Read the discussion case "Executive Compensation" on pages 190-192 then answer/discuss questions 1-7 that follow.

To start with, executive compensation has been a major and main target for criticism by the stakeholders as well as academics over the time of last several years. “Liberty Mutual’s longtime chief earned an average of nearly $50 million a year from 2008 to 2010, making him one of the highest-paid corporate executives in the country, according to state insurance filings reviewed by the Globe (Wallack, 2012)”. At first glance at this question I think; well we live in a capitalistic society where there are no limits on how much money people can make. Also if this CEO started the business and why shouldn’t they be entitled to that much money from the company, right?

It was reasonable for a CEO’s compensation to increase as the company expanded and became a larger entity, and the newly-granted shares and increasing stock options further aligned the CEO’s personal interests with those of the company and shareholders. In this sense, the second compensation package was also well-structured and not excessive. Seeing Sunbeam’s revenue rising and stock price climbing steeply upwards, Sunbeam’s shareholders and directors were fully convinced by Dunlap’s leadership, so they might perceive the increase in compensation amount necessary to retain and better motivate Dunlap to enhance the company’s value. Nonetheless, they neglected the fact that the increased portion of the equity-based compensation also further motivated the CEO’s dangerous behaviors pertaining to improper earnings management.