Executive compensation.

Executive compensation.

Executive compensation has become one of the most hotly contested topics with majority citing a weak link between pay and performance and other the enormous gap that is evident between the executive compensation and the average worker. In the first article “CEO Pay rises Moderately; a Few Reap Huge Rewards” cites how a few of the company CEO’s have benefitted from an increase in the CEO’s pay increase. The article analyses 300 US traded public companies and makes an observation that the three highest paid CEO’s in the US made a total of 188 million which was more than 50 CEO’s at the bottom of the same list. The article further analyses the companies that pay their CEO’S huge amounts of money and finds that none of the best paid CEO’s have their companies ranked among the 10% by 2013. This shows that the performance of the CEO’s is not a major motivator for the CEO’s to be given the hefty pay packages either in the form of stock or cash.

On what basis do the companies pay their CEO’s if not results?

In the other article, “Pay for Performance No Longer a Punchline” there is a huge link between performance and pay packages for CEO’s. In this regard, the article asserts that 51 of the CEOs in the past year were awarded compensation in terms of stocks mainly based on their performance and the performance of the company. The article however highlights that this is a shift from the past trends in the past years with the percentage having increased in recently. It has been mainly attributed to the investors who have pushed for corporate results as the main reason for increased pay. The article highlights the growing trends in pay for performance view and offers examples of companies implementing this method.

Why has it taken the investors this long to get more involved and change the pay structure?

The articles have been well argued with a firm basis for their assertions and opinions. There are numerous examples and empirical data that have been collected from a series of reliable sources to compile the two articles and are, therefore, reliable sources.

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