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Essay / Research Paper Abstract
This 12 page paper looks at incentive base pay that is often awards to senior executives, including stick options, in order to determine if it aligns the interests of the executives with those of the stockholders, or if there is still a conflict of interests. The bibliography cites 16 sources.
Page Count:
12 pages (~225 words per page)
File: TS14_TECEOshare.rtf
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Unformatted sample text from the term paper:
top executives of failed or struggling firm, especially financial firms. It has been argued that these firms, such as Lehman Brothers, are paying high salaries for failure. The idea
of aligning the senior executives interests and the shareholder interests has been around for many years and has, theoretically been put into place with tools such as the use of
share options and long term incentive plans complimented by payment disclosures. However, it may be argued that instead of meeting the desired goals, supporting the interests of the shareholders it
has created a scenario where there are there is the manipulation of share prices and the credibility of leadership is weakened due to the way that self interests may manifest
in the management of the firm. The idea of the senior executives working in behalf of the stockholders is simple, they are
running the business for these who own it, and have been made answerable through a range of systems, including the way that the board needs it be elected by the
shareholders, however the power of many shareholders has been diluted. The concept of answerability has been incorporated into agency theory. Agency theory looks at the relationship between the shareholders and
the management of the company. Agency theory states the management of the company should be acting on behalf of the shareholders. This theory roots back into the early seventies
and scholars in the past have been using it to rationalize organizational behaviors in accounting, economics, finance, marketing and political sciences context. Specifically, "agency theory is directed at the ubiquitous
agency theory relationship, in which one party (the principal) delegates work to another (the agent), who performs that work" (Eisenhardt, 1989). It shreds light on the desires and goals of
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