Unit III Project 2 The process of compensation was brought in to motivate the high-level managers.

. The compensation was paid on the basis of the contribution made by a manager in terms of profit to the organization. Many researchers are of the opinion, that not only compensation have positive impacts but also some complexities. Wowak and ambrick, the two researchers are of the opinion that the characteristics of managers plays a very important role in formulating the policy for compensation. owever, they do not provide the complexities of this compensation.

There has always been !uestions raised on how the compensation of "#$ and other managers are decided. $n what parameters, do the compensation committee decides, what is the right compensation package. Many researchers have tried to study the characteristics of compensation committee, but none are of the same opinion of each other. The !uestion also arises, do voting rights matter% &ormally, in publicly traded companies the shareholder's are not directly involved in negotiating the compensation package, but the board of directors who act as the public's representative decides on the package.

The concept of compensation package dates back to second world war, but it came into prominence in the early ())*s. The parameters were set straight, like what !uality of work has been done by the manager, what did organization gain from the management and how the manager has led from the front. #ven the committee, decided on the compensation package.The compensation plan not only consists of monetary gains but also e!uity-based earnings. The other problem behind choosing the manager was from internal or external sources. +esearchers say that most companies opted for external managers as they think that, an outside member will get fresh ideas and will be able to run the company much more professionally than the internal one. ,s the internal member will be habituated with the work environment and will not be able to extract extra work from employees.

The trends over the executive compensation have dramatically improved over the years, today not only "#$s get monetary rewards and e!uities but also all the fancy toys like cars and also luxury bungalows to live. ,ll this is not the part of executive compensation, this is an addition over it. -uring the time of recession in .**/-.**), executive compensation was a bit low but now, with the improved economy again the executive compensation is rising at a fast pace.

The drawback of such a huge compensation package is that, with this huge package there is a huge pressure on the "#$s to perform. 0f they fail, then all the reputation and hype that was once building around them is put at stake. 0ts like with great amount of cash, even greater responsibilities come. +#1#+#&"#2 3 http344web.b.ebscohost.com4ehost4pdfviewer4pdfviewer%sid567a8(./7-)c9b-6*99-)cc7:e*9eb.8.e/b;6*sessionmgr((6<vid5.<hid5(.* http344web.b.ebscohost.com4ehost4pdfviewer4pdfviewer%sid56(aea76*-(:cc-6.77-):e:(7.cfd)(*:69;6*sessionmgr((*<vid5.<hid5(.* http344web.b.ebscohost.com4ehost4pdfviewer4pdfviewer%sid58996.9aa-)f:a-6be7-)7:e.(af6.af*(*f;6*sessionmgr((.<vid5.<hid5(.* http344web.b.ebscohost.com4ehost4pdfviewer4pdfviewer%sid5*af/d8e.-aee8-67f6-)fdc(**cb)6:b/da;6*sessionmgr(((<vid5.<hid5(.*