Executive Compensation Case Study

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Recommended: Advantages and disadvantages of executive compensation

In the United States, the term executive compensation has many factors that have driven change in the landscape of executive compensation. Examples of those elements include the turmoil in commodity prices, market volatility, and political pressure for the reform of the executive compensation. Further, the executive compensation in the U.S. beats the average worker’s salary growth by a wider margin. However, when looking at the Sarbanes-Oxley Act which was supported by Paul Sarbanes and Michael Oxley represented a massive adjustment to the securities law. Further due to the Sarbanes-Oxley Act, publicly-traded and privately-held companies are obligated to implement and report in-house accounting controls to the SEC for compliance. Nonetheless, I will expand on whether executive compensation is ethical or unethical in the workplace, as well as if the Sarbanes-Oxley Act too strict or not strict enough as it relates to investors. The executive compensation in its numerous …show more content…

Although at the same time functional goals encourage unnecessary risk-taking and increased the probability of unethical and possibly unlawful behavior (James, 2015). All the same, the purpose of executive compensation is an incentive for well-trained executives that make the most of the firm’s value (James, 2015). Further, the benefit that is put in place for the executive is structured to remove all conflicts of interest amongst the executive and shareholders (James, 2015). Although, some workers feel as though the executive compensation is unethical; but according to James (2015) it is given to the executives that are well trained, therefore, it is ethical from his point of view. Additionally, the compensation package assists as an enticement for executives to participate in potentially risky, maximizing activities, and profits that benefit the shareholders whenever ventures are successful (James,

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