Scenario In the business environment, there is a discussion of the more specific

Question

Scenario

In the business environment, there is a discussion of the more specific issue of compensation of top executives. Are CEO's overpaid? This assignment asks you to apply the ideas about justice and about the general issue of income inequality to the question of whether any policy should be adopted to restrain executive compensation in order to reduce inequality, and if so what policy?

Question:

What are some important factual issues which you think will need to be addressed. (Consider using a list. Be sure that for each item, you identify alternative perspectives. That is, what is the issue?)

Explanation / Answer

The issues that need to be addressed in this scenario include:-

1. Based on their track record:-

This means that through their past performance as a marker of their current abilities the CEO'S are paid by the company in the hope of them repeating the same performance that they have been shown to do. This analogy is incorrect as no person is fit for every challenge or opportunity. He may be good at his previous job but bringing him into a new environment with its own personal problems and threat essentially provide another perspective that the CEO needs to address. The alternative to this problem could be a measurement of recent performance as well as projected growth by the company after the efforts of the new CEO.

2. Paying them extra to allow them to step down without issues:-

In such cases, the board pays extra money in the form of a severance package in hopes of the person to step down from their profit n of responsibility and authority and therefore make it easier for the company to select another person as a thheir replacement. The alternative is providing them benefit which matures with the growth of the company.

3. The concept of severance package in case of merger and acquisition

CEO'S are overpaid for the fact that, while mergers, the addition of a newer authority or the company that acts as the majority share in the process may want to instate their own executive as the CEO therefore to avoid a conflict they offer a high amount of money to them. The alternative is allowing the CEO to perform another important function in the new structure.

4. Golden parachute:-

This concept allows the company to procure a high profile talent for the position of the CEO and therefore, pay him/her huge amount of money to entice them to their offer. The alternative should be stick options and long-term packages.

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