Corporate Finance
Excessive pay of senior management has been a trend in the market even when the market is performing under an unsatisfactory manner. Excessive pay of senior management proves the incompliance of corporate governance of a particular company as this happens when the Chief Executive Officer (CEO) of a company has been paid extra or in other words, has been paid negatively related to his or her job skills. This may be a form of over reward for their bad performances. An example of this situation is Disney’s Michael Eisner who was paid $ 38 million for three out of six years of the company’s declined performance which was actually above the industry average, said Stanford GSB Staff. The increase in the remuneration of the senior management has raised questions among the public. Among which is “The current levels of compensation for CEOs in corporate America are, in a word, outrageous,” Jack Bogle, founder of The Vanguard Group told the Fortune reporter, Eleanor Bloxham. However, there are also companies that have restructured their director’s pay from the previous years. . This this this this this This also indirectly increases the company’s accountability and avoids any unwanted obstacles. The conflict of interest between manager and shareholder exist all the time while corporate governance is the remedies for this issue by motivating the manager to work in the interest of shareholders.
The issue of excessive pay of senior management is quite is is is clear in this context that is a problem of collective action.