Concept explainers
Are top executives paid too much? A study of CEO compensation revealed that CEO bonuses nose considerably—from 20 percent to 30 percent—even at companies whose revenues or profits dropped or those that reported significant employee layoffs. Such high for CEOs at underperforming companies. as well as CEO compensation at companies with stellar results, has raised many questions from investors and others. The highest gap in pay was in 2000. CEO pay at the largest U.S. firms was 376 times higher than that of average workers. The gap has shrunk to only 271 times higher in 2016, but that is still a lot higher than the 59-to-l ratio in 1989. The Securities and Exchange Commission (SEC) now requires public companies to disclose full details of executive compensation, including salaries, bonuses, pensions, benefits, stock options, and severance and retirement packages.
Even some CEOs question the high levels of CEO pay. Edgar Woolard, Jr. former CEO and chairman of DuPont, thinks so. "CEO pay is driven today primarily by outside consultant surveys," he says. Companies all want their
To discuss:
Whether increasing the compensation of the CEO at the time of organization's financial crisis is ethical.
Introduction:
Financial crisis can arise at any time, and the managers, CEOs and other senior officials must be ready for every situation. The job of a CEO, manager or any other senior official is very challenging, because they are the policy makers of the company, and if any financial crisis arises, they are answerable.
Explanation of Solution
Yes, it is true that the CEO and managers are paid high as compared to other employees, but other employees are not answerable to anyone during financial crises. CEOs and managers are those who are responsible to carry the company on the top and save the company from crises. Hence, it is ethical to compensate them more.
Sometimes they might fail in their work, but they try their best to keep the companysafe. No manager or CEO can take out the company from every tough situation every time, but it is their responsibility to hire the best employees, who can help them to resolvethe problems.A manager should be capable of analyzing every situation correctly, and create a good team to reduce the problems. Securities and Exchange Commission (SEC)helps to disclose the executive's compensation publicly. Following the SEC mandates, all the companies disclose about the compensation matters.Hence, disclosing compensations of senior officials is also ethical.
Want to see more full solutions like this?
Chapter 6 Solutions
Introduction to Business
Additional Business Textbook Solutions
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
Horngren's Accounting (12th Edition)
Operations Management
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Business Essentials (12th Edition) (What's New in Intro to Business)
- Y Company purchased an asset for $73,000 on January 1, Year 1. The asset was expected to have a four-year life and an $8,000 salvage value. What would be the amount of depreciation expense for Year 1 using double-declining balance? Answerarrow_forwardAnsarrow_forwardPlease give me true answer this financial accounting questionarrow_forward
- Can you please answer this financial accounting question?arrow_forwardY Company purchased an asset for $73,000 on January 1, Year 1. The asset was expected to have a four-year life and an $8,000 salvage value. What would be the amount of depreciation expense for Year 1 using double-declining balance? Ansarrow_forwardFinancial Accountingarrow_forward
- Snowbird Company is constructing a building that qualifies for interest capitalization. It is built between January 1 and December 31, Year 1. Snowbird made the following expenditures related to this building: April 1 $396,000July 1 400,000September 1 510,000December 1 120,000The company borrowed $500,000 at 12% to help finance the project. In addition, Snowbird had outstanding borrowings of $2 million at 8% and $1 million at 9%. Required: Compute the amount of interest capitalized related to the construction of the building. Next Level What effect does the interest capitalization have on the company’s financial statements after it completes the building?arrow_forwardFGH Floral Company has a delivery truck that is being sold after 5 years of use. The current book value of the delivery truck is $6,000. If FGH Floral Company sells the delivery truck for $9,000, what is the impact of this transaction? Provide Answerarrow_forwardOn August 1, 20Y7, Rafael Masey established Planet Realty, which completed the following transactions during the month: Rafael Masey transferred cash from a personal bank account to an account to be used for the business in exchange for Common Stock, $22,000. Purchased supplies on account, $1,190. Earned sales commissions, receiving cash, $18,260. Paid rent on office and equipment for the month, $4,020. Paid creditor on account, $440. Paid dividends, $1,080. Paid automobile expenses (including rental charge) for month, $1,110, and miscellaneous expenses, $750. Paid office salaries, $2,340. Determined that the cost of supplies used was $660.arrow_forward
- What is the corporation's tax liability on these financial accounting question?arrow_forwardEvergreen Logistics incurred the following costs for a new delivery truck: please answer the financial accounting questionarrow_forwardPlease give me true answer this financial accounting questionarrow_forward
Foundations of Business (MindTap Course List)MarketingISBN:9781337386920Author:William M. Pride, Robert J. Hughes, Jack R. KapoorPublisher:Cengage Learning
Management, Loose-Leaf VersionManagementISBN:9781305969308Author:Richard L. DaftPublisher:South-Western College Pub
Understanding Management (MindTap Course List)ManagementISBN:9781305502215Author:Richard L. Daft, Dorothy MarcicPublisher:Cengage Learning