quot executive compensation quot

Please answer the initial discussion post below:

• Use the Internet to research common components of executive compensation plans. Next, examine these components and identify one (1) component that you deem essential to motivate executives to lead companies toward competitive advantage. Provide support as to why you chose that component.
• Popular press and media accounts generally suggest that executives are overpaid. Discuss two (2) principles underlying the argument in favor of high executive compensations and determine whether these principles are sound. Provide examples to support your response.

Classmate Post — In my opinion the most important component that motivates an executive to lead their company towards competitive advantage is a bonus. This includes a sign on bonus, short term bonus, and long long term bonus. I chose this key component for the simple fact that most Americans are motivated by money. When executives are given a sign on bonus the level of ownership to move a company in the right direction is increased significantly before their first day on the job. A short term bonus would motivate an executive to ensure all goals are being met within a short period of time. Some executives are given 20 to 30 percent of their annual base salary for meeting and exceeding their goals. With this in mind I’m sure even a regular employee would implement new strategies that would motivate themselves for a bonus of 30 percent of their salary. The same goes for a long term bonus. This type of bonus not only motivates an executive to move the company forward for longer periods of time, but it also motivates them to not search for different employment opportunities if they do happen to present themselves. This in turn also motivates the employees of that company because they recognize the consistency at the top level. In ending, whatever type of bonus that an executive is given whether it be discretionary, performance, predetermined, or target, it will greatly benefit the company’s motivation from the top down.

It is a known fact that top executives of companies are compensated very well. This is made very known by numerous media outlets. The thoughts and opinions of those media outlets are our eyes inside of this top position, and ultimately they are our minds to the compensation practices of these companies. But in the defense of those executives here are a couple of reasons why executives may be compensated so well. You should always form your own opinion, but only after seeing both sides. One of the main reasons why executives of your company are compensated the way they are is because they are the face of your company. With this comes the responsibility of getting blamed for company failures and praised for company triumphs. Think of an executive as a coach for a sports team. Win or lose the coach has to answer questions. The same goes for an executive. An executive has to sit in front of a company’s board and answer those tough questions of why the company is gaining or losing on their projected goals. Everything is in question, from their motivation tactics to their knowledge of their particular field. An executive is constantly under pressure to be successful. Another main reason why executives are compensated so well is because of their ability to mentorship. Again, think of an executive as a coach. The knowledge that is passed down to their staff helps those staff members become successful and reach their own career goals. It is an executives obligation to motivative their team and put them in a position to be successful. They are ultimately mentoring potential executives. If an executive is away on business they have coached up their team to maintain the company and coached them to step up and represent that company just as the executive would. Like I stated executives are paid very well. Its up to you to form your own opinion whether or not they are overpaid. Remember executives are the equivalent to a sports team coach, just for your company. Your company’s image lies with them.