EXECUTIVE PAY COMPENSATION

Executive pay compensation

Executive pay compensation

Introduction

Are U.S. executives paid too much? Does the government have a say on executive compensation plans? These questions come at a time when world markets are trying to recover from a world recession caused by irresponsible business practices, highly politicized stimulus plans at tax payer expense, rising unemployment rates, and highly publicized CEO bonuses of public companies that took government bailout money. Congress has taken the first step at curbing executive compensation plans through a financial regulatory reform bill, also known as the Dodd-Frank Act. The bill includes a say-on-pay provision that can lead to shareholders of public corporations determining executive pay. Executive compensation is just with market forces, not the Federal Government, correcting any disparities.

The purpose of this paper is to discuss various aspects of employee compensation. There are many laws in place that help to protect workers and to help set some standards in fair compensation policies. The practices of salary surreys and other mechanisms for determining what is fair compensation for specific employees will be discussed along with how comparable worth affects compensation policies and guidelines.

Employee Compensation Law (FLSA)

A corporation experiences many difficult issues such as, social responsibility, corporate governance, corporate wrongdoings, workplace discrimination, and workplace harassment, however; executive compensation may be the most debatable subject. A Chief Executive Officer (CEO) holds the highest position within a corporation and needs to help structure the corporation. Some say the CEO deserves the large compensation which comes with the job. A CEO is known for their knowledge, experience, and leadership skills. A CEO is also responsible for the direction the organization and to make sure that all employees are positively contributing to that direction. A CEO brings much to the table, but the number one goal for the CEO is to maximize profits and secure the financial strength of the company.

Employee compensation can be a complex and controversial subject. Compensation is the basis for why employees work. Many factors can play a role in how an employee's compensation is determined including: employee education, type of job (industry), job market conditions, geographic location, and many other factors. A major law that pertains to compensation is the Fair Labor Standards Act (FLSA) of 1938.

The FLSA established a set of guidelines and rules that cover many legal aspects that employers must follow pertaining to employee compensation. FLSA was a set of laws put into place during the recovery of the great depression. The FLSA sought to ensure a maximum number of jobs, which paid a minimum livable wage. This law is important since it was and is used to help maintain a minimum level of pay and to establish rules regarding a standard work week and overtime pay. Over time pay can be look at as a positive in a couple of ways. One is for the employee as they get more pay for time over the maximum during one week and two for employers not wanting to pay overtime or limiting ...