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Public perception of the pay and benefits given to executives

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research
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accounting
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westminster

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  1. Executive Summary.
  2. Introduction.
  3. Executive Pay and Benefits?An Overview.
  4. To achieve these goals, Schiehll goes on to provide an overview of the specific performance-based standards and organizations utilize to develop executive compensation packages.
    1. Budget Performance Standards.
    2. Prior Year Standards.
    3. Peer Group Standards.
    4. Timeless Standards.
    5. Discretionary Standards.
  5. Synthesis and Comment on the Research.
  6. Conclusion.

Research on executive compensation packages clearly demonstrates that the general public is incensed and outraged by, what they perceive to be, excessive pay and benefits for these professionals. Throughout the course of the twentieth century organizations have argued that executive pay and benefits are determined by the actions of the executive as they relate to the performance of the organization. However, a more integral look at the issue of performance demonstrates that while investors believe ?performance? should be directly linked to the financial development of the organization, executive committees that structure executive compensation packages ?performance? refers to a host of issues that lie outside of the financial development of the organization. In an attempt to elucidate these issues, this investigation considers a review of the specific issues that are taken into consideration in developing executive pay and benefit packages.

[...] Given the importance of investors to the organization, it is clear that maintaining investor confidence is a key issue for the continued success of the organization. In the end, it is clear that if organizations are to meet the needs of all stakeholders and shareholders information on how executive compensation packages are developed will be necessary for achieving this end. Executive compensation has become such a contentious issue that if steps are not taken by the organization to mitigate this tension, notable problems may develop in the long-term. [...]


[...] What appears to cause the most obfuscation for investors and other organizational stakeholders is the umbrella term of ?performance? that is typically utilized to justify the pay and benefits packages given to executives. Clearly, what this research elucidates is that the specific measures of performance that are utilized for developing executive compensation packages are much more complex than what the average investor understands. In most cases, investors assume that the ?performance? that is utilized for executive compensation is that which is directly tied to the financial development of the organization. [...]


[...] Other authors looking at the specific variables that are utilized in determining executive compensation make the observation that in many cases the problems that arise in the context of public perception of executive compensation as excessive stem from the fact that most investors believe that executive compensation is, or should be, directly related to the financial success of the firm. However, in most cases the specific compensation package that is developed for the executive is predicated upon a wider range of variables that consider the overall development of the corporation. [...]

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