This assignment provides you with an opportunity to summarize ethics in financia
ID: 452907 • Letter: T
Question
This assignment provides you with an opportunity to summarize ethics in financial responsibilities and to evaluate ethical considerations of executive compensation by drafting a reflection paper. Write a 500 - word paper by addressing the following questions : 1. Do you think executive compensation in its various parts (i.e., salary, stock options, severance packages) funded at the current levels is unethical? If so, how would you revise the compensation so that it was just? On what basis would you change it ? Do es the government have a role to play? If so, in what manner? 2. Is the Sarbanes - Oxley Act too strict, not strict enough, or just right? Explain.
Explanation / Answer
1. The executive compensation in its various parts funded at the current level definitely is unethical, most of the organizations these days are concentrating more on the variable pay that can be added to an employee's compensation package. On the other hand the employee's will only be concerned about the net income that they might take home everymonth. Employees will not be concerned about the total package as they wont be able to realise it every month. Another major issue is that there are chances of bias while the stock options are given to employees. This will create an unrest among the employees and some organizations will also tend to be unjust and unfair towards their employees by exploiting these offers.
The compensation can be revised by fixing a particular percentage for each components of the salary and this inturn should be based on the position for which they are recruited. Each and every designation in the company should have fixed pay pack that is in proportion with the designation and the experience. When standards for salary compensation are derived, this will definitely solve the issues with executive compensation.
Yes, Government can intervene in these regulations but not to a greater extent. Government will have to fix basic norms for the components that can be included in the salary compensation which will help both the employers and the employees.
2. The Sarbanes – Oxley Act is just right because the act aims at protecting the investos. These days many companies forge their accounts in order to attract the investors. The Sarbanes Oxley Act also mandates strict reforms to improve financial disclosures from corporations and prevent accounting fraud. Hence the Sarbaes – Oxley Act is just right to protect the rights of the investors.