Executive compensation is compensation given to the upper management to ensure that they are well attended to. This compensation is given to the executive body because it plays a fundamental role in drafting the strategy of the company, implementing it as well as making decisions. The compensation in its various parts includes an increment of salary, stock options, and severance package ( Core et al., 2018 ). I think the compensation seen to be funded at the current level is ethical because it ensures that respective parties are fully committed to the mission, vision, and values of the company they represent.
In my opinion, executive compensation will only be revised if respective parties do not respond or meet their expectations. This simply implies that either the victim is lazy or he or she is not willing to be part of the project. In case these events happen, measures will be put in place to ensure that the company works well. The compensation can be revised by fixing a specific percentage of each component of the salary ( Bolton et al., 2016 ). However, this ought to be based on the position the executive employees are recruited. Additionally, the company should ensure that every designation in the company has a fixed pack that aligns with the experience and designation of the employees to solve the issue of executive compensation.
Delegate your assignment to our experts and they will do the rest.
The government will play a role in intervening regulations but not to a great extent. It will fix fundamental norms for components that can be incorporated in the salary compensation to assist both employers and employees. The Sarbanes-Oxley Act is right because the act safeguards investors. Since numerous firms forge accounts to attract investors, the act has mandated stringent reforms to enhance financial disclosures from companies and prevent accounting fraud. This reveals that the Sarbanes-Oxley Act is right because it safeguards investors’ rights.
References
Bolton, P., Scheinkman, J., & Xiong, W. (2016). Executive compensation and short-termist behaviour in speculative markets. The Review of Economic Studies , 73 (3), 577-610.
Core, J. E., Guay, W., & Larcker, D. F. (2018). The power of the pen and executive compensation. Journal of financial economics , 88 (1), 1-25.
