Us Auto Industry Back on Top

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UNITED STATES AUTO INDUSTRY BACK ON TOP . . . OF CEO PAY Valerie Lieber MGT 2500 Human Resource Management February 11, 2015 INTRODUCTION Executive compensation has been at the forefront of discussion for a long period of time. Analyzed by academics, highlighted by the media, questioned by Congress, and scrutinized by the general public, the topic warrants much debate. In the 1990’s, total executive compensation increased substantially as companies began offering stock option programs; CEO’s of S&P 500 saw an average increase of 150%. While many top U.S. executives continued to receive enormous compensation options throughout the economic downturns of 2001 and 2008, none was more apparent than those in the automotive…show more content…
They stated that CEO compensation should not be ranked by how much an executive is paid, but how they are paid. A CEOs whose wealth was tied to a change value of shareholder wealth had a better compensation that a CEO who had a higher monetary compensation. This analysis led to the increase of stock options for CEOs and top corporate executives. However, this type of compensation structure has unintended consequences tied to it. Stock options create incentives for executives to participate in risk seeking activities. It creates a positive gain if the price of stock goes up, but no downside risk. So what value do CEOs offer companies and their shareholders? Just as the NFL places value on a stellar athletic performance and so-called super human ability, so does corporate America. In extremely competitive markets of CEO headhunting, the stakes could never be higher. Companies today are facing lightening fast technological advances, corporate espionage, global competition, extremely tight profit margins, innovative startups and an indiscriminate number of other issues that need to be managed by top executives. Companies not only need leaders, but also visionaries, innovators and calculated risk takers. This combination of person can be extremely difficult to find, employ and retain. When it comes to the question as to whether or not CEOs and top executives are overpaid, the question can irrevocably be answered
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