Consumer And Shareholder Protection – Coursework Example
Corporate scandals and unethical business practices The Chief Executive Officers are the well-paid officers in any organization. The reason behind their huge lump sum pay is because they are the heads of many profits and non-profit making organisation (Bebchuk and Grinstein)s. For a person to qualify for this position in any organisation, whether privately owned, non-governmental or governmental, he or she must possess high qualifications that are prescribed by the organisation. Their acquired knowledge from the study and experience helps them to organise the factors of production and other inputs that will lead to high profits.
According to Section 951 of the Dodd-Frank Act, the shareholders who are the owners of a firm by the power of their shares on the hand have the say on how much the chiefs will be paid. In most cases, the CEO’s do own a lot of shares in the company and hence influences major decision-making processes. They, therefore, have the necessary power to command the amount of salary they would like to be paid (Bebchuk and Grinstein). The shareholders may also instigate a high CEO salary in order to motivate him or her to drive the firm in a profit making organization.
In most cases, the Dodd-Frank Act does not sufficiently protect the stakeholders from being abused by the CEO’s. The CEO’s usually take advantage of their high salaries to create a boundary between them and the stakeholders (Bebchuk and Grinstein). They hire themselves lawyers whom they use to intimidate the stakeholders of an organisation. In some organisations, the CEOs are often good to the stakeholders in an organisation. They do act as required by the organization despite the amount of salary they are paid.
Bebchuk, Lucian and Yaniv Grinstein. THE GROWTH OF EXECUTIVE PAY. Discussion Paper. New York: Harvad University Press, 2005. Internet.