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Why Chief Executive Officers’ Pay and Performance Should Be Controlled Essay Sample

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Why Chief Executive Officers’ Pay and Performance Should Be Controlled Essay Sample

            There should always be a say on pay of the CEOs’ in big companies, the say on pay votes of different organizational investors’ is important because they are the ones who judge the way they want their company to function.  The investors’ say on directors pay and performance is not stomping the company’s management, but rather away of investigating the general performance of the organization.  Knowing the CEO pay is important, when the company needs to know what their stocks  and the total profit the company has made.

             When the investors check on this, the company will be in apposition to know what their pensions and benefits are.  However, other companies like the Coca-Cola, say that investors should not be given an opportunity to meddle in what CEOs earn because they do not know how these managers handle their competitors who sometimes offer low prices to the customers.  This way, their rivals deny them a chance to attract the targeted market.  There is always a confusion on just what is right about the say on pay.  Most big companies around the world has managed to use this system of arranging salaries together with performance of CEOs.  Currently, the pay of CEOs has been seen going down whenever their performances are detected to be decreasing.  Hence, say on pay help investors to attain their objective of not paying failures, rather than achievers (Barbara, 2008).

            Companies and investors’ say on the compensation of CEOs from different companies has been shocking.  In that what the CEOs expected the least, actually happened when a report from workers and investors from a company in U.K. passed on say on pay votes.  The votes were criticizing the CEOs’ pay against their performances.  This action of investors demanding to know exactly what CEOs earn left the CEOs asking themselves what wrong they had done and why they (investors) behaved in such away.  This type of criticism, however, is not being supported by every one within an organization.  Those who oppose this, argue out that passing a bill of say on pay of CEOs’ performance will not solve the problem and neither is it the best way to compare pay with performance.

            The workers union in an organization and other noticeable shareholders are basically the determinants of say on pay rules.  These investors are always demanding information about what the company is paying the directors and also the type of technology that the company is using.  The proposal is meant to harmonize the organization’s operations with the investors’ attitudes towards say on pay bill.  Another reason for this proposal, is to enable the workers and subordinates of a company to understand their organizational environment and performances so that they are able to meet the organizational requirements and expectations.  Therefore, the management of a company is encouraged to implement these policies in their by-laws to enhance easy understanding of the organization’s activities.  Perhaps, if this is done the organization will stand better chances of improving the quality of their products and services.

            Concern on the executives’ performance also affect the economy of a company and therefore, whenever the economy is growing it is always right to share all the benefits equally amongst the workers and the investors.  This will show equity and honesty in the company, and unnecessary politics within a company will be eliminated.  Also the internal tax rate on the wage income and the investment income is balanced following the total amount of salary an individual is earning.  When  this performance is encouraged workers who are earning small money are not undermined with overwhelming taxes.  In that, the executives and other managers who are earning a lot of cash are the ones to pay heavy taxes depending on the total salaries they get, and those workers who earn little money are to be taxed less money.

            This practice is vital because a company is able to increase its income and lower its taxes, this will result into workers benefiting activities, as well as improving the infrastructure and public services.  Examples are, institutional centers, dispensaries, commercial centers and many others.  The investors say on executives performances are sometimes used to determine future expectations of business, whether the business is expecting an increase in the total income generated by the organization’s operations or the vise versa.

Reference list

Barbara, K., (2008). Performance Appraisal. New York, Macmillan.

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