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ETH501 Module 1 Case - TOP EXECUTIVES RECEIVING LARGE...

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TOP EXECUTIVES RECEIVING LARGE BONUSES FROM THE BAILOUT MONEY 1 Should the top executives of the major banks that received bailout money be allowed to receive large bonuses? TUI UNIVERSITY Claudio Quiroz-Diez Module 1 Case Assignment ETH501 – Business Ethics Dr. John R. Malpass 10 January 2011
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TOP EXECUTIVES RECEIVING LARGE BONUSES FROM THE BAILOUT MONEY 2 Abstract The following paper talks about the ethical issues of top executives receiving millions of dollars in bonuses from the bail out money received from the Trouble Asset Relief Program (TARP), which is money that came from taxpayer’s funds. Citigroup Inc, Merrill Lynch & Co. and seven other leading U.S. banks paid their top executives billions of dollars in bonuses during the fiscal year 2008. I will explain “bonus” and why these top executives and employees of these large companies close to financial collapse, bailed out by the government should not have received any additional compensation for that year. I will also express my opinion on the utilitarian and deontological implications these issues have caused, including the new laws, and a final conclusion. Keywords: trouble asset relief program (TSRP) gross domestic product (GDP)
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TOP EXECUTIVES RECEIVING LARGE BONUSES FROM THE BAILOUT MONEY 3 Should the top executives of the major banks that received bailout money be allowed to receive large bonuses? After reading and analyzing different sources regarding the use of bailout money to pay large bonuses to top executives from companies close to financial collapse, I come to the conclusion that these top executives should not have received any bonuses. Throughout this paper, I will establish and refine my points of view, and my utilitarian and deontological connotations on my position. I will explain bonus, the reason why they received their bonuses, and why they should not have received them. Bonus is an extra pay due to good performance, or is money or an equivalent given in addition to the employee’s usual compensation (Merriam-Webster). Going by its definition, these tops executives did not deserve any bonuses because their companies performed poorly, and their companies rewarded these individuals for their failure, because these top executives where the ones making the decision which, took their companies to their economic collapse. The reason why some of these top executives received their bonuses and retention payment was because their prior financial contracts were signed before the 2008 collapse and could not be legally cancelled. A spokesperson from Wells Fargo commented that they implemented the bonus policy and the shareholders approved these bonuses (Freifeld, 2009).
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