CEO COMPENSATION CONTROVERSY

Submitted by, DCSMAT,Vagamon

In boom or recession, a company is growing or surviving not by default but by effective strategies .This strategic decisions are taken by CEO.

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What is CEO Compensation Controversy ?

1) the extent to which CEO payis tied to firm performance

1) the extent to which CEO payis tied to firm performance

2) the overall size of CEO pay2) the overall size of CEO pay

CEO PayControversy

CEO PayControversy

1) What are the reasons for high CEO compensation ?

oTo reduce CEO Turnover.oComplexity Of workoInterlockingoStock OptionoDownsizing/layoffsoInflation

2) What are the negative implications of significant gap between the compensation of top management and lower management ?

oLack in the quality of TEAM PERFOMANCE.oLoyalty.

3). Profits and stock prices are not necessarily the indicators of a CEO’s performance. The company’s stock performance depends on external variables and cannot determine the performance of the CEO. Can we agree with the statement ?

Both CEO and External factors plays a vital role.

Economic Boom - Increase of share price is a natural phenomenon.

Economic Depression - If company is not much affected credit goes to CEO

eg: Apple

4 ).What measures can be taken to solve the CEO

compensation controversy ?

oCompensation for Layoff.oCEO compensation should be based on company

performance.oIndependent Compensation deciding committee without

CEO participation.

5 Whether providing high compensation to CEO’s will ensure better performance, growth and overall development of the company? If not what should the company do to motivate and make the best out of a CEO?

oCEO turnover is not desirable.oTo get/retain the perfect talent.

Motivation Techniqueso To create a feeling that they are the owners of the company.

6). What is the compensation frame work that company should follow for the remuneration of CEO. Should the criteria be uniform across the industrial spectrum?

Uniform remuneration is practically impossible.It depends on ability of the person to take strategic

decisions.Performance of the company.

Company Name CEO

Wipro Azim Premji

Dr Reddy’s lab K. Anji Reddy

Dell Computers Michael Dell

Many of the CEO’s are also the promoters of the company. They withdraw the profit of the company as their salary.

CONCLUSION

CEO’S play a vital role in the day to day performance of the company. Strategic decisions are made by them so proper compensation should be given .The management should ensure that the decisions taken should not create a conflict between the top and bottom level of organization

THANK YOU