cause and effect of executives payment between 2005-2008. compare to some executives in Europe , Asia, China, and Russia

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Cause and Effect of Executives Payment between 2005-2008 . Compare to Some Executives in Europe , Asia , China , and Russia

CAUSE AND EFFECTS OF EXECUTIVE PAYMENTS (BONUSES

Introduction

According to Cassidy (2002 , executive payments contains of a number of components which are the same as those for other payment systems However , these components belonging to executive payment are administered differently , while others are unique to managerial compensation . Among these components exists the bonuses issued to executives as incentives . The bonuses as part of executive compensation are

known as short term incentives . Other components include the capital appreciation plans which are also known as long term incentives , base pay and deferred compensation

History of Big Bonuses

According to Cassidy (2002 , a problem arose in the nineteenth century with the emergence of publicly held corporation . This problem was the manner in which it would be ascertained that executives perform their chores in the interest of the shareholders . French (2007 , states that an attempt to solve this issue caused a wave of leveraged buyouts in 1980s . This in turn caused the increase in use of stock as a means of executive compensation in the 1990s . The shortfall of this was that it created a platform which gave the executives room to mislead investors and maintain high stock prices for their personal gains . They did this through interference with the accounting systems by exaggerating both revenue and cost

From the time of economists like Adam Smith to the times of Milton Friedman , these...