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Ethical And Legal Environment Of Organizations

Good Essays
Executive Compensation
Cristy Lawler
Bethel University

Dr. Dorothy Black
MOD 450: Ethical & Legal Environment of Organizations
January 9, 2017 Abstract For years CEO’s have been making larger salaries in compression to the employees that work for the company. How the salaries are decided can be one of two ways. Either by how much money the company brings and gives to the shareholders or by how well the CEO runs the company. The question becomes which was is not only morally but also ethically right. CEO’s will do whatever is necessary to make more to please the shareholders and give the shareholders fast money quickly? By doing this the CEO’s or executives may use morally and unethical practices. If the CEO’s put in the hard work
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A positive workplace for not only workers but also the shareholders can be traced back to the top executives within the companies. Everyone is in a win-win situation (Edmans, 2016).
Influencing Factors When the issue of the executive leaders getting based on how much money they can make the shareholders, the problems becomes how they make the money. The CEO’s may be to do things that are unethical and wrong in an effort to make more money. Things like insider trading, stealing from the employee 's pensions plans and becoming involved in Ponzi schemes all the sake of making more money for the shareholders because the end results become the CEOs will, in turn, make more money. In the case of basing the salary on how well the executives actually perform in the leadership roles within the company, it is fair to say the better the job performance the better the pay. The thinking behind this process is simple. The better the executives perform each quarter or yearly the higher the raise or bonus is, which leads to more money for the shareholders. This plan can be used as a tool to help ensure long-term success for the company and for the shareholders (Schneider, 2013).
Potential Solutions The shareholder based salaries and the job performance series can both be successful in the executive compensation plan. The shareholder based plan needs to keep in mind that for every dollar that
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