The article how to Pay CEOs What they’re worth written by Rick Newman explains the compensation patterns of Chief Executive Officers (CEOs) in companies and criticises huge disbursement to CEOs in large organisations where they manipulate financial position and performance of a company to inflate short term profits t receive increased compensation irrelative of the long term consequences of understating losses and overstating profits. The principles which should be applied while evaluating and determining executive compensation packages have also been explained comprehensively in the article.
The author of the article explains performance of CEOs in large organisations and the related compensation packages they receive by giving examples of CEOs from Merrill Lynch, Citigroup and AIG. The author explains how CEOs of these companies received inflated compensation packages and left these companies to experience losses so severe that government intervention was necessary to save these companies from going bankrupt. The author argues that the CEOs neither take responsibility of these losses nor do they return the money they received in return for their services. The author moves forward by explaining how companies can resolve this issue by applying a few basic principles for evaluating and determining executive compensation.
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