REMUNERATION AND PERFORMANCE

Remuneration & Performance

Abstract

The purpose of this study is to see the CEO remuneration is based on the firm performances. The paper has focused on the pay performance relationship among executives and the factors which have more weight are Firm size and compensation, Strategies and Remuneration and finally the extent of diversification of the company. The results which were conducted through pay performance relationship shows that the UK companies CEO pay is equivalent to firm's performance.

Table Of Content

ABSTRACTII

INTRODUCTION1

Thesis Statements1

DISCUSSION1

Methodology3

Dependent Variables3

Profitability of the firm and compensation4

Factors affecting the Pay and performance of the firm7

Recommendation8

Strategies and Remuneration8

The extent of diversification9

CONCLUSION9

REFERENCES10

CEO's pay and firm's performance

Introduction

From last few years, there has been an extensive research on the company's top management pays/commendation and performance of the company. Performance management and pay scale structure attracts investors. The expectation of the investors is that salary and compensation paid to the executives has close connection with the company's performances. There has been a huge debate by the public in UK and U.S.A regarding the pay and performance relationship. Existing literature review states that sizes of the company has a dependable and positive causal factor of chief executive pay and at the same time, this relationship between pay of chief executive and performance of the company research is conflicting & at the most proposes a weak relationship.

Thesis Statements

Is CEO's pay equivalent to firm's performance?

Discussion

To see whether CEO's pay equivalent to firm's performance, few UK big firm has been selected. These big firms are from retail sector, manufacturing sector and service sectors etc. At all level of employees and executives categories are surely those whose salary and compensation has been the subjected for major debates. High salaries offered to them have first media sparked interest and subsequently the researchers. Several critics have been made ??to the effect that high salaries were granted to senior executives by companies that do not emerge profit. It is even estimated that this violates companies' remuneration rules of social justice and that their salary is golden parachutes disguised (Martin, Richard, 2002, pp. 17).

For example, Michael Ovitz was hired by Michael Eisner for the position of president at Disney. Less than two years he was fired for him job. His severance pay 38.9 million U.S. over three million options to purchase shares traded by the year 2002 which was estimated at 190 million pounds , which is not too bad for 14 months work. Then comparing the average salary of executives with that of all workers; it was note that it is 120 times higher in the United States; Canada 36 times; 33 times in the United Kingdom; Germany 31 times and 16 times in Japan (Soreze, 2008, pp.27).

Significant legislative reforms have been adopted recently by the Britain government which is more control executive compensation. These reforms comprises of the Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC) and the Financial Accounting Standards Board (FASB). The SEC has responsibility to prescribe standards for governance committee's compensation ...