Pay Without Performance: Overview of the Issues Essay Example

for greater amount of shareholder in cut costing.

Also the incentives could be in another way like to be re-elected the board the incentives will be as prestigious position and social networking connections with prominent leaders and businessmen. Sometimes because of friendship and loyalty of the board could do their pay cost effectively. And the board would be dependent on the shareholders so it will be way of enhancement. This kind of reform will let the shareholder with satisfaction. Moreover the board will deal with the arm’s-long so they have the power like in some case firing of executives such as AIG for leagal and unethical violence.

There are many alternatives of decoupling of pay from performance like Non-Equity compensations for example Bonus so the payment will relay on the performance of the CEO’s. Windfalls in equity-based compensation that’s mean it will be based on the stock value the higher the stock the higher the compensation will be. Furthermore, compensation at and after departure this type of incentive will based on argument contracting for the future performance.

Improving transparency in the organization is very important so the compensation should be disclosing to the shareholder to have the transparency placing a monetary value on all forms of compensation. Disclosing all non-deductible compensation. Disclosing the relationship between pay and performance. Disclosure of option and share unloading

In the end the article suggest for improving pay arrangement by redusing windfalls in equity-based compensation, reducing windfalls in bouns plans, limiting the unwinding of equity incentives, tying bonuses to long-term return performance, be worry of paying for expansion, dividend-neutrality, avoiding soft-landing arrangements.