Corporate Governance and Executive Compensation Analytical Essay by Nicky

Corporate Governance and Executive Compensation
Examination of the topic of corporate governance as it applies to CEO overcompensation.
# 128289 | 2,998 words | 11 sources | APA | 2010 | US

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This paper explores corporate governance, particularly relating to CEO overcompensation. Executive compensation is of great importance, the paper explains, because the goals of executives and shareholders should be aligned by resorting to executive share ownership, and it affects compensation levels throughout the whole organization, from top to bottom. The paper notes that in response to the focus on executive compensations, many companies have adopted cutting edge approaches, including caps to several compensation methods and limitations in executive pay. The paper also discusses long-term incentives and questions whether executive compensation should be linked to company performance. This paper contains illustrative charts.

Definition of the Topic
Why Is It Important?
What Is the Current Environment/Landscape?
What Are the Implications for Managers?
How Can This Be Resolved?

From the Paper:

"Linking CEO remuneration to company performance is quite a controversial topic and has been building up in the last 30 years. A study made by The Corporate Library (2007) highlights twelve of the largest corporations in US, which are characterized by high executive compensation and poor performance over a five-year period. During this whole period, the corporations paid out $865 million to their CEOs who in turn lost about $640 billion in shareholder value. The corporations mentioned in this study include: AT&T, BellSouth, Hewlett-Packard, Home Depot, Lucent Technologies, Merck, Pfizer, Safeway, Time Warner, Verizon Communications and Wal-Mart Stores.
Each of these companies paid its CEO at least $15 million in the two fiscal years available, had a poor performance compared to their competition and had a negative return on stockholders over the studied period."

Sample of Sources Used:

  • Cadbury, Sir A. 1992. Committee on the Financial Aspects of Corporate Governance. London, Gee.
  • Combined Code. 2003. The combined code on Corporate Governance. London, Financial Reporting Council.
  • Directors' Remuneration Report Regulations. 2002. Available from:
  • Girma, S., Thompson, S. and Wright, P. W. 2007. Corporate governance reforms and executive compensation determination: evidence from the UK, The Manchester School, vol. 75(1): pp. 65-81.
  • Greenbury, Sir R. 1995. Directors' Remuneration: Report of a Study Group Chaired by Sir Richard Greenbury. London, Gee.

Cite this Analytical Essay:

APA Format

Corporate Governance and Executive Compensation (2010, July 09) Retrieved April 19, 2024, from

MLA Format

"Corporate Governance and Executive Compensation" 09 July 2010. Web. 19 April. 2024. <>