Private and Public Sectors: The History of Severance Pay

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When choosing to work in public or private sector companies there are many factors to consider? Do you want to work with a company that only considered the factors of its company or do you prefer to work for a company that have employee compensation? These factors are considerably important. Based on empirical studies one of the determining reason about private sector is that it compensation is based on the company cash profits and tax avoidance rather than value of the executive compensation. In my report I support my findings of several researchers: (Tafkov, 2009), (Reda & Schmidt, 2014), and (Clausen, 1999). Researcher findings from James Reda and David Schmidt based on severance considerations and the history of severance pay. The History of Severance Pay goes back to more than 60 years. According to James Reda and David Schmidt “it is very uncommon for CEOs to have agreements with their respective companies.” Second researcher is Paul Clausen the difference between executive compensation and a business value. A company value is based on the compensation of their business. Whenever compensation is high, the lower the profits and accumulated assets associated with the value of the company. In this report the literature review will further tell you the how private and public sector differences and the factor associated with each sector, the elements of executive compensation vs. value. The gap in the literature is why employee compensation differs from executive compensation, determining reasonable in executive compensation or business value, and the determinant of executive compensation in private firms. The methodology report will show how relative performance information (RPI) on feedback from employee performance when inc... ... middle of paper ... ...mpensation is based on independent peer performance. (Tafkov, 2009) uses the RPI model in a team based approach on effort and performance. Works Cited Clausen, P. T. (1999). Executive compensation or business value. ACA News 42.3 , 25-25. Gomez-Mejia, L. M.-K. (2003). The determinants of executive compensation in family-controlled public corporations. Academy of Management Journal, 46 , 226-237. Kvaal, E., & Langli, J. C. (2011). Determinants of Executive Compensation in Private Family Firms. SSRN Working Paper Series . Masuda, B., & Barens, K. (2004). Innovative Trends in Private Companies. Workspan 47.9 , 24-30. Reda, J. F., & Schmidt, D. M. (2014). Private Company: Severance Considerations. (S. Reda, Ed.) Financial Executive 30.1 , 55-60. Tafkov, I. (2009). Private and public relative performance information under different incentive systems.

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