The Enterprise And Regulatory Reform Bill

The roles for these two acts are to monitor the trades and mutual fund trading, stocks and bonds of companies and financial professions and also to monitor any fraud or internal deception going on. The Acts required companies to report the compensation of the top three executives. This brought about many companies finding loopholes to earn higher salaries. One of which was called performance pay, which was considered a bonus for a job well done. In hindsight this act established very little to regulate CEOS high pay. CEOS’ are now taking many risks and taking part in questionable methods to earn a bigger performance

CEO compensation has been a heated debate for many years recently, and it can be argued

The Institute for Policy Studies in Washington found that five elements in the tax code encourage overpaying executives, which can cost the American people up to $20 billion a year (Doc A). $20 billion is no small sum and could instead be used to increase the standard of living in America. With this extra taxpayer money, the US could provide healthcare to millions or slash infant mortality rates across the globe. Instead, it goes into another personal account in the Cayman’s. CEO

Executive Compensation has many different definitions. For simplicity of this paper, the definition used will be that of the Center on Executive Compensation which is defined as a “broad term for the financial

Over the past twenty years, America has seen a substantial amount of change and development amongst many technological industries. Old ideas have been revolutionized. Technology has been continuously upgraded time and time again. Americans slowly have to do less and less because new inventions are constantly increasing their abilities to do more for us. Cars are getting faster, phones are getting smarter and before we know it, 2-dementional televisions will be a thing of the past. Despite everything that is growing around us there are still few things that have stayed the same; for example, the average American income for 99

Stock options are another main concern and are based upon the performance of a company. A lot of companies are in a low return and low compensation which then caused bad business and it’s about 400 times that amount. I believe the government is trying to tighten down on excessive executive compensation with implementing salary caps. Executives are unrealistic with common life and way of living therefore; they do not take any consideration with the underdogs of the company or the world. The economy does have hope but it’s a long way from being stabilized once again.

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.”

The term 'executive pay' has acquired bad connotations over the past decade or so and the recent Occupy Wall Street movement brought this issue back into public consciousness on a worldwide scale (Minder, 2013). In Switzerland, the parliament recently passed legislation that would limit executive compensation excesses under threat of fines and imprisonment and the European Parliament agreed to limit banker bonuses to twice their base salaries. Adding fuel to this fire was last month's announcement that the golden parachute for departing Novartis Chairman Daniel Vasella would include a $78 million dollar severance payment.

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.

The second compensation package was not well designed nor did it help define what the corporate strategy would be. For a second time the compensation package focused on maximizing shareholder’s wealth and didn’t take into consideration the stakeholder’s position at all. Dunlap’s package was deeply weighted in company options ($3.75M). In fact it was weighted heavier than before. The stock grants were

It’s no secret that the new administration has very different governance practices and priorities. Congress and CEO Pay Ratio regulations are being examined and the SEC has opened discussion on itthe topics for discussion. Change is here and boards will likely encounter unforeseen challenges.

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.

This is in sharp contrast to the US, where these two components account for 25% and 39% of total payment, respectively (Fernandes et al., 2012 and Schultz et al., 2013). In addition, Murphy (2013) and Schultz et al. (2013) argue that US companies remuneration model is based on tax policies that place a $1 million cap on deductible cash remuneration and US stock exchange listing rules that encourage equity and options components of remuneration. However, comparable inducements in form of regulated payments are not observed in the Australian market (Schultz et al., 2013) and normally, these incentives promote shareholders’ wealth by aligning managers and stock holders interests.

When the public sees a salary that they consider to be too big; they are usually looking at only half of the picture. It is impossible to look at just the salary, without taking any other factors into consideration. One must look at the amount of earnings, compared to the profits of the company. For instance, Robert Allen, who runs ATT, was recently pointed out by 60 Minutes as being an overpaid executive. Their major problem was that he had been responsible for laying off 40,000 employees, while still managing to give himself a large pay increase. At first glance, this situation may appear to be one involving a greedy and overpaid executive. However, upon closer examination, it proves to be much to the contrary. The situation wherein the 40,000 employees were laid off was not a matter of getting rid of people for an unfounded reason. It was more a matter of getting rid

Executives and those responsible for misdeeds should have been subject to significant clawbacks of compensation. If the reason they misbehaved and took inappropriate risks was to raise compensation, losing that compensation would be an appropriate punishment.