Strategic Management
3rd Edition
ISBN: 9781259420474
Author: Frank T. Rothaermel The Nancy and Russell McDonough Chair; Professor of Strategy and Sloan Industry Studies Fellow
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 2ESI
a)
Summary Introduction
To determine: The potential ill effects of large and increasing disparity in CEO pay.
b)
Summary Introduction
To determine: Whether the current executive pay is justified and give reasons for justification.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
HIT AND MISS MANUFACTURING: A Star is Born
The head of HR deparment, Atty. Mila Bravo was directed by the company president to act as leader of a committee whose task is to revise and update the current compensation scheme of the company.
The president designated the following as members of the committee:1. The accountant2. The executive secretary3. An employee in one of the operating units4. An officer of the labor union5. The internal auditor6. A representative from the public
During the first meeting, the seven members were all present. The president made a briefing regardingthe purpose of the group, the circumstances that lead to the formation of the group, and his expectations about the group’s output.
The group proceeded to determine the various factors relevant to the determination of the rates of the various jobs. Most of the members of the committee, however, cannot devote the time required to finish the job within the time frame indicated by the president. It turned out later…
Two competing food vendors were located side by side at a state fair. Both occupied buildings of the same size, paid the same rent, Kshs 1,250, and charged similar prices for their foods. Vendor a employed three times as many employees as B and had twice as much income as B even though B had more than half the sales of A. Other data are as follows:
Vendor A
Vendor B
Sales
Kshs 8,000
Kshs 4,500
Cost of goods sold
50% of Sales
50% of Sales
Wages
Kshs 2,250
Kshs 750
You are required to answer the following:
Explain why vendor A is twice as profitable as Vendor
By how much would vendor B’s sale have to increase in order to justify the doubling of the number of employees at the same rate of pay if B’s desired operating income is Kshs 350?
April 2012, Forbes' magazine began its annual report on executive com- pensation with the following: "Our report on executive compensation will only fuel the outrage over corporate greed. In 2011 the chief executives of the 500 biggest companies in the U....got a collective pay raise of 16% last year, to $5.2 billion. This compares with a 3% pay raise for the average American worker. The total averages out to $10.5 million apiece....So much for the moral suasion granted to shareholders last year with the first-ever say-on-pay votes for U.S. public companies." (Forbes, April 4, 2012) Public criticism of executive compensation, especially among top execu- tives of U.S. based public-traded corporations, increased significantly following the economic collapse that began in 2008. For many observers, the magnitude of executive pay, both in absolute terms and relative to average workers, particu- larly needed to be addressed at a time when failed management was at fault for so much public and…
Knowledge Booster
Similar questions
- After spending several weeks on the job, Jennifer was surprised to discover that her father, Jack, the owner of Carter cleaning company, has not formally evaluated any employees performance for all the years that he had owned the business. Jack's position was that he had "100 higher priority things to attend to, and "such as boosting sales and lowering cost, and, in any case, many employees didn't stick around long enough to be appraisable anyway. Furthermore, contended Jack, manual workers such as those doing the pressing and the cleaning did periodically get positive feedback in terms of praise from Jack for a job well done, or criticism, also from Jack, if things did not look right during one of his swing through the stores. Similarly, Jack was never shy about telling his managers about store problems so that they, too, got some feedback on where they stood. This informal feedback notwithstanding, Jennifer believes that a more formal appraisal approach is required. She believes that…arrow_forwardAfter spending several weeks on the job, Jennifer was surprised to discover that her father, Jack, the owner of Carter cleaning company, has not formally evaluated any employees performance for all the years that he had owned the business. Jack's position was that he had "100 higher priority things to attend to, and "such as boosting sales and lowering cost, and, in any case, many employees didn't stick around long enough to be appraisable anyway. Furthermore, contended Jack, manual workers such as those doing the pressing and the cleaning did periodically get positive feedback in terms of praise from Jack for a job well done, or criticism, also from Jack, if things did not look right during one of his swing through the stores. Similarly, Jack was never shy about telling his managers about store problems so that they, too, got some feedback on where they stood. This informal feedback notwithstanding, Jennifer believes that a more formal appraisal approach is required. She believes that…arrow_forwardLu is 26 years old and single with a master's degree in education. he is paralyzed and confined to a wheel chair as a result of an auto accident. he earns $32,000 per year. instead of the tradition "one benefit package fits all," the company is allocating an additional 25 percent of each employee's annual pay to be used for discretionary benefits. those benefits and their annual cost are as follows: a) supplementary health care for employee: plan A (no deductible and pays 90 percent) =$3000, plan B ($200 deductible and pays 80 percent)=$2000, plan C ($1000 deductible and pays 70 percent)=$500, s supplementary health care for dependents (same deductibles and percentages as above): plan A=$2000, Plan B=$1500, plan C=$500, supplementary dental plan =$500, life insurance: plan A ($25000 coverage)=$500, plan B (50,000 coverage)= $1000, plan C(100,000 coverage) =$2000, plan D ($250000 coverage)= $3000 mental health plan =$500, prepaid legal assistance =$300, vacation =2 percent of annual pay…arrow_forward
- Expedia, the online travel agency, plans to dismiss 3,000 staff and streamline its “sclerotic and bloated” organisation following the departure of its chief executive and chief financial officer in December. The company said in an email to staff that it will “reduce and eliminate certain projects, activities, teams, and roles to streamline and focus our organisation”. The cuts represent around 12 per cent of Expedia’s workforce, and 500 jobs will go in the company’s Seattle headquarters. The restructuring comes after a boardroom battle between the former chief executive Mark Okerstrom and chief financial officer Alan Pickerill and its long time chairman and shareholder Barry Diller over the company’s strategy. At the time, Mr Diller said that Mr Okerstrom had presided over a “material loss of focus”. During an earnings call this month, Mr Diller added that Expedia had become “sclerotic and bloated” and that it was “all life and no work”. “We are stopping doing dumb things and starting…arrow_forwardExpedia, the online travel agency, plans to dismiss 3,000 staff and streamline its “sclerotic and bloated” organisation following the departure of its chief executive and chief financial officer in December. The company said in an email to staff that it will “reduce and eliminate certain projects, activities, teams, and roles to streamline and focus our organisation”. The cuts represent around 12 per cent of Expedia’s workforce, and 500 jobs will go in the company’s Seattle headquarters. The restructuring comes after a boardroom battle between the former chief executive Mark Okerstrom and chief financial officer Alan Pickerill and its long time chairman and shareholder Barry Diller over the company’s strategy. At the time, Mr Diller said that Mr Okerstrom had presided over a “material loss of focus”. During an earnings call this month, Mr Diller added that Expedia had become “sclerotic and bloated” and that it was “all life and no work”. “We are stopping doing dumb things and starting…arrow_forwardExpedia, the online travel agency, plans to dismiss 3,000 staff and streamline its “sclerotic and bloated” organisation following the departure of its chief executive and chief financial officer in December. The company said in an email to staff that it will “reduce and eliminate certain projects, activities, teams, and roles to streamline and focus our organisation”. The cuts represent around 12 per cent of Expedia’s workforce, and 500 jobs will go in the company’s Seattle headquarters. The restructuring comes after a boardroom battle between the former chief executiveMark Okerstrom and chief financial officer Alan Pickerill and its long time chairman and shareholder Barry Diller over the company’s strategy. At the time, Mr Diller said that Mr Okerstrom had presided over a “material loss of focus”. During an earnings call this month, Mr Diller added that Expedia had become “sclerotic and bloated” and that it was “all life and no work”. “We are stopping doing dumb things and starting…arrow_forward
- 1. What are the advantages and disadvantages of extending Maura Currier’s leave?2. If you were the human resource director, would you grant her request? Explainyour answer. The Medical Leave Problem (FMLA)Maura Currier has been working for ComputerTech for four years as a lead supervisor.During the past two years, Currier’s mother has needed frequent medical attention forher diabetes. Being the only child, Currier has helped her mother, Jane Currier, as oftenas her work schedule would allow. Unfortunately, during the past two years, hermother’s condition has worsened.With the passage of the Family and Medical Leave Act (FMLA), Currier asked the firmfor, and was granted, an unpaid leave to care for her mother in accordance withcompany policy (see the policy in Exhibit 4.9). The agreement stated that Currier couldmiss work every Friday for 60 weeks rather than take off 12 straight weeks. At the endof 60 weeks, Currier returned to work full time and immediately began missing work tocare…arrow_forwardCASE: HERE WE GO AGAIN The position of business office manager at Memorial Hospital has been a “hot seat,” changing incumbents frequently. When the position was vacated last May the four senior employees in the department were interviewed. All were told that because they were at the top of grade and the compensation structure for new supervisors had “not yet caught up with that of other jobs,” the position would not involve an increase in pay. All four declined to pursue the position, and all were given the impression that they were not considered fully qualified anyway, but that they might be considered for supervision again at a later date. That same month a new business office manager was hired from the outside, and the four senior employees were instructed to “show the new boss all you know.” Over the following several months the finance director told all four employees that they had “come along very well” and would be considered for the manager’s position should it come open…arrow_forwardSuppose that you are the newly appointed Human Resource Manager in a service organization. The company has a high level of employee grievances and twelve (12) Labour Tribunal (LT) cases connected to disciplinary ground terminations, where the company had to reinstate the services of some terminated employees and pay compensation as per LT’s orders. Illustrate your plan to manage the grievances and ensure no more disciplinary-related LT cases in the future. please help me to get answer.arrow_forward
- FACTS: Noel is a computer programmer at Jonadel Corporation. He was delighted to know that part of the company’s athletic program is a mixed doubles tennis tournament to be held at the corporate tennis court. Grace, who works in the same department, used to play with Noel on many occasions and the two would like to compete in the tournament. They feel that there is a great chance to win the annual tennis competition. There is a growing interest among employees who are tennis players in the corporation as it develops more productivity at work. The management themselves are all tennis enthusiasts. The tournament is scheduled on Friday afternoon and management declared this as a “tennis holiday”. It is a day of fun and workers can cheer for their respective teams. Management supported the program with free snacks and fun fairs to make the occasion memorable. It was a four – consecutive Friday’s tournament. Noel and Grace advance to the final round. They were leading in the third set which…arrow_forwardMary and Sue both work in the same department. Mary believes that Sue is being paid considerably more than she is. In fact, both employees are being paid about the same amount. Mary complains to her boss and the compensation manager and wants a pay raise. What should the compensation manager say, assuming the firm follows the policy of not revealing the pay of individual employees? Should Mary be told the amount of Sue’s pay? Or, should Mary only be told that there is a “misunderstanding’ and that her believe is incorrect? Or, should some other approach be taken?arrow_forwardFACTS: Miss Joan Santos, a computer programmer in Mannadel Corporation for more than six (6) years now, was discussing her salary situation with Mr. Roderick Santiago, her manager. Miss Joan was unhappy because she did not receive any salary increase from ten to fifteen percent. Miss Joan’s performance has been considered very satisfactory for the last five (5) years and previous to this she got very substantial increases in salary due to the important programs that she made for the corporation related to accounting and personnel matters. She made a lot of improvements in the purchasing systems and systematized inventory records in materials management. The management had recently started a comprehensive job evaluation program and some positions are aligned within the salary grade approved by the management committee, where Mr. Roderick Santiago is also a member. Mr. Santiago explained to Joan that her salary was already way above the salary grade for the position evaluated and…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Management, Loose-Leaf VersionManagementISBN:9781305969308Author:Richard L. DaftPublisher:South-Western College Pub
Management, Loose-Leaf Version
Management
ISBN:9781305969308
Author:Richard L. Daft
Publisher:South-Western College Pub