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 alliances gunstock dropped 11 percent during the fiscal year. Applied Materials chief operating officer Mike splinter got a tidy $5 million bonus in 2004, despite a stock drop off of more than than 22 percent. That same year Rick Wagoner, CEO of public Motors, saw GM stock plunge 25 percent, to that extent he still pocketed a $2.5 million bonus further 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 constrain to make money? Yet before dismissing berth brokers in the business community as self-destructive and/or fantastically stupid, perhaps we should give them the benefit of the doubt and chase for a rational ex patternation. The most important point that scoffers kindr ed Crowley over cheek is that the business world is uncertain. When a company brings in a new executive, it is not at all apparent 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 ostentation regardless of the executives competence, it is entirely possible that the plan will failand the executive knows this as well as anyone else. Because of this, it would be very risky for such an executive to secernate a contract in which, say, he or she stick around $20 million if the company were p rofitable, but $50,000 if the company tanks.! quite than sign that contract, the executive (who must be quite bring to pass to be offered such a job in the ice place) could consult or take a less elicit position and earn, say, $5 million for sure. This principlethat an executive gets paying 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 privation to get a full essay, order it on our website: OrderCustomPaper.com

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