CREDIT AGRICOLE

Excessive pay awards to Executives and Directors



Excessive pay awards to Executives and Directors

Introduction

Executive compensation has since long been subjected to controversial elements underlying excessive pay and monetary benefits they are presented with. Not only has it attracted the attention of policy makers and research students in the field of Academics and Education, but also the media is now aware about the higher level of compensation that characterizes the salary package received by professionals in the corporate suite and the directorate. The main dissent that arises from this feature of the corporate world is entrenched in the opinions and views of the shareholders; regarding the issue, who own significant interest in the organisations awarding excessive pay awards to those placed in higher echelons. It is unlikely to be consistent with the interests harboured by shareholders, in fact it has been argued that the deviation between the shareholders' interests and the pay structure to which Chief Executive Officers are entitled to receive are wide denoting one of the major concerns that shareholders are presented with. It usually is considered in opposition to the economic theory, indicating that the shareholder dissatisfaction is not futile and the executive compensation is indeed subjected to unusual patterns and trends (Bebchuk and Fried, 2003, pp. 82).

To reach to the roots of the issue, it is important to create substantial background through determining who is behind the pay-setting process which will not only set the context of this paper rightly, but as a result of this, significant backdrop will be attained that will prove to be an enabler to later proceed towards considering the issue in the light of one specific organisation. Credit Agricole will be used to serve the objective of this assignment basically which mainly revolves around the study of excessive pay awards to executives and directors; which has emerged as one of the key business issues. Considering the issue in the context and against the backdrop of one specific organisation; Credit Agricole in this case, is imperative to explore the issue in its entirety within the realm of practicality and corporate operations.

Discussion

Understanding the pay setting process and the entities who are behind it would help in the formation of much richer perspective, thereby providing greater insight upon the gaining of empirical evidence, as a consequence of which the aims and objectives of this assignment would be effectively met. Economic theory that usually guides and dictates the development of salary structures along with the overall compensation and benefit packages; for the professionals on the executive layer of management, is known as principal-agent model. Observing the struts of this theory, it is seen that the pay structure is usually designed on the basis of the consideration pertaining to what will help in the attraction, motivation and subsequent retention of directors, executives and managers. The aim of the firm in this regard is to seek an effective compensation package that will maximize the involvement of staff occupying the corporate suite, thereby contributing to the ...