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Below is your assignment for this subject. Please read the brief and instructions thoroughly. An ongoing debate in practice and academia is the total remuneration a Chief Executive Officer (CEO)...

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Below is your assignment for this subject. Please read the brief and instructions thoroughly.

An ongoing debate in practice and academia is the total remuneration a Chief Executive Officer (CEO) receives compared to the recent or current performance of an organisation, especially when a loss occurs. Some reports in the media or from peak body organisations and associations discuss the huge divergences, for example, a salary package (including payouts when CEOs leave voluntarily or otherwise) in the many millions of dollars when a loss of much greater proportions is reported.

The following practitioner article is an example of the type of credible source (i.e. scholarly resource), that could assist you in undertaking this assessment.

Kay, I & Martin, B 2017, ‘The SEC’s mandated CEO pay ratio in the context of income inequality: perspectives for compensation committees’, The Corporate Governance Advisor, vol. 25, no. 1, pp. 1-8.

Part A: Written report

Conduct a review of remuneration as a corporate governance issue and write a report with your findings. Use the concepts, tools and techniques learned in this subject to review the extent of these statements at the individual, board, organisation or other levels.

These focus questions could guide you in writing your report:

  • How are some organisationsable to successfully align CEO/executive remuneration with theorganisation’sobjectives tomaximiseshareholder wealth viaorganisationalperformance? Discuss what has led to the success and how it could be sustained (e.g.short termand long-term incentives, subcommittee(s) oversight, etc.).
  • What are some of the corporate governance causes that lead to organisationsbeing criticised or being less successful in aligning CEO/executive remuneration withorganisationsobjectives tomaximiseshareholder wealth viaorganisationalperformance.Particularly when large losses occur or small profits. Discuss the reasons for this and what can be done to address them.

    Requirements

    Your assessment must include:

    • A description of the issue related to the remuneration as a corporate governance issue.
    • An outline of the bases or criteria for the review of the CEO/executive remuneration and organisationalperformance governance issue(s). For example, mention which rules, standards or guiding principles are relevant for the review, discuss their importance and why it is appropriate for you to use them.
    • A critical review of the organisation’sgovernance applying the relevant concepts, principles, standards or other tools and techniqueslearntduring this subject.
    • Recommendations for suggested improvement based on your review.

    It is important to demonstrate your knowledge about the corporate governance issue and to clearly reference your sources. Read about your issue in journal articles (using the AIB Online Library), books (including the textbook), industry reports, business literature, etc. Remember to note down your sources and reference your sources in the report.

    To do well you need to structure your discussion appropriately, use good references, and clearly link recommendations to the description and analysis presented earlier in the report.

    Answered Same Day Mar 15, 2020

    Solution

    Sarah answered on Mar 20 2020
    140 Votes
    1
    Assignment Title
    Student Name
    Course Name
    Instructor Name
    Date
    Table of Contents
    Executive Summary    3
    Introduction    4
    Critical Review of Rules/Standards Governing Executive Remuneration    4
    Importance & Reason for Some Organization Being Successful    6
    Corporate Governance Issues Affecting Remuneration    8
    Recommendations    9
    Reference    10
    Executive Summary
    Corporate governance of an organization is a system of rules, regulations, policies, and practices which provides direction to the entire organization. Sa
    anes Oxley Act 2002, SEC, Dodd-Frank Wall Street Reform and Consumer Protection Act and other federal securities law play an essential role in forming the corporate governance. Executive remuneration is related with the corporate governance as they determine the criteria for measuring the compensation. Section 14A(a) of SEC states about the importance of obtaining shareholders consent related to the executive remunerations. Various rules are formed to have direct control over these executive compensations. Some organizations are successful by tying up the executive compensation with the financial performance of the organization and using independent committee for determining them.
    The primary issue arises when the board of members is not capable and independent in decision making and highly inclined in boosting the shareholder's wealth. Such weaknesses of board members result in poor corporate governance and higher compensation to executives. In such situations, corporate governance becomes ineffective and resulting in poor organization performance. Independent and external directors should play a significant role in the board for forming and governing the corporate governance. In short-term adhering to all the policy requirements are challenging but in long-term, these policies will yield great benefit to the organization.
    Introduction
    Corporate governance plays an important role in the business and is causing the problem to the executive remuneration. Corporate governance is a way an organization is governed, and that requires to establish a balance between the management and the shareholders of the company. The main aim is to protect the interest of the shareholders and to improve the shareholder’s wealth. The entire organization is directed and controlled by the corporate governance, and executive remuneration is related to the corporate governance (Kay and Martin, 2017). They set the basis for the remuneration for the executives and mostly they are blamed because they are flexible and biased towards the executives of the company.
    The set policies and procedures more flexible that is providing loopholes to the organization in providing higher compensation to the executives. Corporate governance of the company is responsible for determining them and these board members. There are a variety of measures that an organization can use to evaluate the performance of the company and the board selects the beneficial measure to pay huge compensation to these executives (Kay and Martin, 2017). They are not effective in forming policies and procedures that are stringent and will curtail the opportunity for the corporate frauds and thus, corporate governance of the organization is responsible for higher remuneration to the executives.
    Critical Review of Rules/Standards Governing Executive Remuneration
    Corporate governance in the US is adopted based on the Sa
    anes Oxley Act 2002, guidance of SEC, Dodd-Frank Wall Street Reform and Consumer Protection Act and another federal securities law. Sa
    anes Oxley Act 2002 poses a restriction on the compensation paid to the CEO and other top executives of the company. According to SOX 2002, executives of the company should not be paid compensation for their risk-taking ability and without providing the result that is expected by the company.
    Incentives were the main sources of earning higher amount, but SOX 2002 has provided a restriction on these compensations (Cohen, Dey and Lys, 2009). Compensation has a direct connection with the corporate governance of the company and thus, providing a restriction on the incentive compensation provides better opportunity to control the higher compensation of CEO. Form 4 filing with the SEC is providing a restriction to the companies that are making use of stocks to pay the compensation. Form 4 filing requires the company to submit the stockholding position and stockholder details which restricts the company from paying large compensation to the CEO of the company (Hsu and Liao, 2012). It poses restriction to the corporate governance board in developing the compensation plan.
    Say on pay as per the section 951 which resulted in a new Act that is Section 14A(a) that will require the consent of the shareholders of the company. It is essential for the company to get the shareholder vote for the say on pay at least every six years (Kumar and Zattoni, 2016). The...
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