Viacom chief executive officer Sumner Redstone took home about $28 meg in 2004, including a inducement of $16.5 million, even as his ships familys rake dropped 11 percent during the financial year. Applied Materials chief operating officer Mike head for the hills got a tidy $5 million bonus in 2004, despite a stock drop off of to a greater extent than 22 percent. That same year Rick Wagoner, CEO of habitual Motors, saw GM stock plunge 25 percent, further he still pocketed a $2.5 million bonus simply slightly less than his award in 2003, when GM stock actually rose. So much for accountability. As noted, this phenomenon is ab initio kind of puzzling. Why would firms reward incompetent executives? Dont they posit 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 scoffers analogous Crowley over get wind is that the business world is uncertain. When a company brings in a new executive, it is not at all seeming(a) 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 crying(a) regardless of the executives competence, it is entirely possible that the throw will failand the executive knows this as well as anyone else. Because of this, it would be very risky for such an executive to point a contract in which, say, he or she select $20 million if the company were profitable, but $50,000 if the company tank! s. quite an than sign that contract, the executive (who must be quite complete(a) to be offered such a job in the wampumpeag place) could consult or take a less elicit position and earn, say, $5 million for sure. This principlethat an executive gets compensable 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 insufficiency to get a full essay, order it on our website: OrderCustomPaper.com
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