Distributed that explain the calculation of the bonus

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
distributed that explain the calculation of the bonus and the rationale and that show executives discussing operational and marketing strategies. I. Managerial and Executive Pay —Because of their significant ability to influence organization performance, top managers and executives are a strategically important group whose compensation warrants special attention. One concern appears to be that in some companies rewards for executives are high regardless of organizational performance. A. Executive pay can be linked to organizational performance (from an agency theory perspective) by making some portion of executive pay contingent on company profitability or stock performance. This may mean less emphasis on noncontingent pay and more emphasis on outcomeoriented contracts, both shortterm and long-term. B. There has been increased pressure from regulators and shareholders to better link pay and performance. The Securities and Exchange Commission (SEC) requires
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
companies to report compensation level for the five highest paid executives and the company’s performance relative to that of competitors over a five-year period. In 2006, the SEC put additional rules into effect that require better disclosure of the value of executive perquisites and retirement benefits. C. The cost of benefits adds an average of 37 percent to every dollar of payroll, thus accounting for about 27 percent of the total compensation package. Controlling benefits is crucial for competitiveness. D. Although it makes sense to think of benefits as part of total compensation, benefits have unique aspects.
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern