Need help with response to discussion for my Corporate finance class

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I need to respond to a discussion board post. In only 4 sentences what would be a good response for the following statements. What is the best way to respond?

1.(Initial post Post) The amounts paid to top Executives in the United States are excessive. This is because some Executives receive heavy pays even when they do not perform well. Most companies compensate Executives a payment that is not based on performance and another that is based on performance. Both pays are significant, and companies end up paying them even if their Executives do not produce better results, which makes them excessive.

(Response from professor) while I’d most probably agree with your answer to the first question, one may say that it lacks proper reasoning. The most notorious companies like Alphabet or Apple indeed spoil their executives when the performance is not that good. Amazon stands alone because Jeff Bezos is the CEO and one of the key shareholders. In part, he responds to himself. The two former companies have hired “mercenaries”.

Companies with less impressive financial statements nevertheless make impressive tasks and hire individuals with ambitions that supersede their professionalism. Only few of those companies survive. Utilizing a good team of executives is an important factor, but excessive compensations do not guarantee the adequate profit for the stakeholders

2.Initial post Executive compensation

There is such an excessive amount of pay for executive compensation. For example, the CEO of CBS and Viacom receive 3.5 million in 2013 and 2012. Yes, the answer would differ if the form of compensation were 100% incentive pay. When first asked if there is such a thing as excessive for executives, I did think, it would be very different if the pay was in incentives such as Oracle CEO, Larry Ellison and others that are paid almost nothing in salary a year. When a CEO is paid little to nothing; it’s telling the people they are willing to bet it all on the company even their pay. Yes, CEOs can get tremendously rich from incentive pay but at least it’s not part of the company’s operational funds. As per the article from The Washington Post, “Cozy relationships and ‘peer benchmarking’ send CEOs’ pay soaring”, the article reviews how CEOs pay are increasing. The increase in CEOs pay is creating an even larger “gap between workers and top executives…income inequality in the United States is reaching levels unseen since the Great Depression.” Personally, I don’t believe only the CEO should a huge amount of money when many times the day to day person is getting paid only minimum wage many times.

Response?

Initial Post.

. Would your answer differ if the compensation were 100% incentive pay? Keep in mind that CEOs like Larry Ellison of Oracle and others work or have worked for a $1 annual salary.

In terms of compensation, I believe CEO’s should be offered incentive pay. If the company is consistently generating revenue through sales, then incentives should offered across all levels of staff. Receiving $1 salary is fair because CEO’s all receive options, stocks, and bonuses as part of their compensation package.

3.Explain why you agree or disagree strongly with one point made in one of the articles in the “Executive Compensation – Reading” item under the “Course Documents” tab. Or, make the same comment on a point from an interesting source that you find yourself.

I disagree with “peer benchmarking” as a factor for CEO compensation. According to, (Whoriskey, 2011), board of directors try to offer salary packages comparable to other executives in the industry. They have adopted the belief that if they offer excessive amount of money then they will be able to retain the best person for the job. However, this is far from the truth. “At Countrywide Financial, then-chief executive Angelo Mozilo earned more than $180 million as he led the company to the brink of ruin during the five years before the housing bust” (Whoriskey, 2011).

Reference:

https://www.nytimes.com/interactive/2019/business/highest-paid-ceos-2018.html

https://www.washingtonpost.com/business/economy/cozy-relationships-and-peer-benchmarking-send-ceos-pay-soaring/2011/09/22/gIQAgq8NJL_print.html

Response?

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