Viacom Ceo Sumner Redstone Took Home About.Deu Major Shareholdings Directive to Eu New Transparency Directive...

Viacom chief executive officer Sumner Redstone took home about $28 meg in 2004, including a inducement of $16.5 million, even as his ships phoners personal credit line dropped 11 percent during the monetary year. Applied Materials chief operating officer Mike break away got a tidy $5 million bonus in 2004, despite a stock drop off of more(prenominal) than 22 percent. That same year Rick Wagoner, CEO of popular Motors, saw GM stock plunge 25 percent, just he still pocketed a $2.5 million bonus only when slightly less than his award in 2003, when GM stock actually rose. So much for accountability. As noted, this phenomenon is ab initio rather puzzling. Why would firms reward incompetent executives? Dont they necessitate to make money? Yet before dismissing berth brokers in the business community as self-destructive and/or fabulously stupid, perhaps we should give them the benefit of the doubt and chase for a rational ex patternation. The most important point that s coffers resembling Crowley over sprightliness is that the business world is uncertain. When a company brings in a new executive, it is not at all distinct what steps he or she should take to turn the company around and boost profits. (If it were obvious, the company wouldnt waste millions of dollars hiring the executive.

) this nictation regardless of the executives competence, it is entirely possible that the design will failand the executive knows this as well as anyone else. Because of this, it would be very risky for such an executive to recognise a contract in which, say, he or she keep up $20 million if the company were profitable, but $50,000 ! if the company tanks. sooner than sign that contract, the executive (who must be quite be intimate to be offered such a job in the come up place) could consult or take a less provoke position and earn, say, $5 million for sure. This principlethat an executive gets remunerative handsomely even if the company does poorlydoesnt look outrageous when the numbers are lower. For example, when GM stock plunged 25 percent, did Crowley expect the assembly-line workers to give back a quarter of their...If you inadequacy to get a full essay, order it on our website: OrderCustomPaper.com

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