The Evolution Of Executive Compensation From The Early 20th Century To Today

1199 words - 5 pages

The Evolution of Executive Compensation from
The Early 20th Century to Today

Executive compensation has been studied for many years. While the average person probably does not think about it on a daily basis, it is necessary to watch trends. Tracking the amount of money they make as well as the bonuses, stock options, and other benefits shows how these executives are making such high rates of pay compared to the ordinary worker. Tracking how much an executive makes began in the 1930’s. Since this time not only has it been tracked but there have been many changes in the type of tracking, the tax laws and what is available as compensation. This paper highlights the changes that have occurred since the early 20th century until today and changes that still need to occur.
The ability to track executive pay began at the beginning of the 1930’s. This is when the Securities and Exchange Commission (SEC) began to require disclosure of executive pay (Fryman 2010). Before this time there is really no clear record of remuneration. In 1953, the Revenue Act determined that “restricted” stock options could be taxed at the much lower rate on capital gains (Fryman 2009). Throughout the 1950s, only about 16 percent of the executives were awarded an option in any given year. The frequency of stock option grants has increased steadily since then (2009). They could pay a 25% tax rate on stocks versus a 70 to 90% rate on labor income (2009). The obvious thing to do would be to take the stock options.
For the most part, the value of compensation from the time of World War II (mid 1930’s – 1945) until the 1970’s did not change (Fryman 2009). Many executives are on a Pay-to-perform compensation plan. The most surprising fact is during the 1950’s and 1960’s firms were growing but executive compensation was not growing at the same pace. As a matter of fact it grew very little. From 1980-1990 firms were growing and so was the pay of the executives. The pay increase from 1950-1960 was about an increase of 1.3 percent per year. During the 1980-1990 period the growth rate was at an annual rate of 5.9 percent. An even greater rate of 9.2 percent per year was given during the 1990-2000 year period (2009).
Around 1975, the gap between the compensation of an average worker and the compensation of an executive began to grow considerably larger (Dew-Becker 2009). The rate at which executives’ pay was increasing was much faster than that of average workers. This is probably due to the fact that board members set CEO’s salaries. Many times these board members interests are more in line with the CEO then with the stack holders. By the 1990’s, executive compensation was so outrageous that it caused congress to make some major changes. In 1992 congress made these changes beginning with the mandatory disclosure of executive pay was expanded dramatically, with far more detailed explanations of precisely what executives are paid and why they are paid it (2009). Second, the tax...

Find Another Essay On The Evolution of Executive Compensation from The Early 20th Century to Today

History Culminating Essay Topic 3 Question: The Importance of immigration to the Canadian economy in the early 20th century

955 words - 4 pages In the early decades of the 20th century, over one in five people living in Canada were immigrants. As immigrants were introduced to the freshly structured land and economy of Canada it began to show that immigration was essential to the financial structure of Canada. Some of the reasons that immigration was important to the Canadian economy in the early 20th century is that it prevented American expansion, Railway Business benefited from

Post-colonial Encounters in the Early 20th Century

1567 words - 7 pages Alfred Noyes wrote The Empire Builders at the turn of the twentieth century. Despite the time at which it was written in, there are various post-colonial themes regarding the hierarchy of difference. The tone of the poem is pessimistic which is understandable since Noyes is writing during the Naturalist period of English literature. Noyes is speaking to the middle class of England; those who “fulfill their duties as they come” (Noyes, 45). He

The Evolution of Radio in the 20th Century and Into the Television Age

1223 words - 5 pages bombarded with other forms of communication since its creation, its timelessness and simplicity has kept it strong throughout the 20th century and in the world today. The first development of radio began during the late 19th century by German scientist Heinrich Hertz. Hertz’s goal, however, was not aimed at developing radio as we know it today, but rather proving the existence of electromagnetic radio waves (Maltin, 1). Radio waves are part of the

The impact of World War 1 on Japanese development in the early 20th century

2524 words - 10 pages government.It is clear to see that the First World War had a great impact on the direction of the development of Japan in the early 20th Century. The war contributed to the industrial boom which in the short term was beneficial then detrimental to the country's economy. However it allowed for the exploration of ideas in organisation that have proved essential industrial development of Japan since that time. The impact the war had on Japan required party

Were the industrial leaders of the early 20th century robber barrons?

2474 words - 10 pages public. The workers in the companies were shown appalling treatment, receiving little pay and no benefits. Through their fraudulently deceitful dealings, these men stole from the government, the people and the culture of America. The industrial leaders of the late 19th century were true robber barons.The millionaire moguls used their money to influence the political system and swindle the American public. They bought votes for politicians who would

Expansionism in the 19th and early 20th century U.S. was a departure of past American Expansionism

884 words - 4 pages . The purpose of expansion in the mid 1800s was to balance society and fulfill the American' destiny.Expansion of the early 20th century was often based on political and economic incentive. The rise of "New Imperialism" and America's recognition of its own world status led to the conquering of many politically and economically strategic places. After the rise of industrialism, big business looked to invest their capital. Around 1900, the most

The notion of the 'American Dream' as the concept appears in various works of the early 20th century American authors

1191 words - 5 pages hard and your merits will be rewarded.OriginsThis image has both historical and economical roots. Among the subsequent flows of immigrants we can find the characters of the „American family Saga” – the grandparents who came from the „Old World” to exploit a new opportunity and in order to make their dreams come true, worked and suffered hard in order to support their children who – as the second generation - cherished

Early 20th Century Geopolitical Theories

2626 words - 11 pages descriptive tool this can used to quite an extent as an analogous way of assessing how states behave, alternatively it can be utilised as an ideological tool to justify certain geopolitical actions. The Heartland Theory During the early 20th century Russia and Britain vied for dominance over Iran (the Great Game), Russia through its Caucasian and Central Asian territories and Britain from India. Peter Taylor states ‘Put simply, the heartland model is

5. Discuss how the ideas of Futurism were reflected in the designs of the early 20th century

1094 words - 5 pages and ended in 1916, however, it has influenced many art movements such as, Art Deco, Surrealism and Dada. Art Deco in the early 20th Century Art Deco is a design style which originated from Paris in the early 20th Century. Art Deco affected a lot of area’s in design during the 1920s and 1930s which includes Architecture and Industrial Design. In the late 1920s Art Deco seemed to catch on in the U.S and became a very popular style. At the time

The Legacy of Perceptions of Interracial Relationships as Demonstrated in Late 19th and Early 20th Century Black Literature and Events

2057 words - 8 pages The Legacy of Perceptions of Interracial Relationships as Demonstrated in Late 19th and Early 20th Century Black Literature and Events The history of interracial relationships in America is a painfully loaded issue which is still evolving in the consciousness of the 20th century. Because the first instances of sexual integration occurred under the institution of slavery, our understanding of them is necessarily beset with dominance, violence

Early 20th Century Eugenics as part of Modernism

1080 words - 4 pages As the sun was setting on the 19th century, a new theory, called eugenics was just beginning to rise. Eugenics is the idea that human mental, moral, temperamental and physiological traits are passed down through generations, and that society should attempt to foster the reproduction of those with favorable traits and discourage or eliminate those with less than favorable traits. In the early parts of the 20th century, eugenics was put into

Similar Essays

Immigrants And Immigration Movement Of The Early 20th Century

1118 words - 4 pages Immigration Movement of the Early 20th Century "Here is not merely a nation, but a teeming nation of nations." -Walt Whitman People have been immigrating to the United States ever since the European settlers first founded the nation. The first immigrants were white European settlers who came for an assortment of different reasons, such as freedom of religion and employment opportunities. Waves of immigrants poured into the US until

An Overview Of Britain In The Early 20th Century

1253 words - 5 pages An Overview of Britain in the Early 20th Century During the early 20th century in Britain, lives for everyone changed dramatically. The population levels increased. From 1901 – 1911 the population increased from 42 million to 45 million. This meant there was an increase in birth and a decrease in death rates. There were very distinct social divisions. At the top were the upper and upper middle classes. They earned

Causes Of Tension In Europe In The Early 20th Century

755 words - 3 pages Marcus FujitaTowards the end of the 19th century, the tension between the European countries had built up leading to a war involving the whole world, known as World War. Although, there were many factors which built up tension which eventually led to the war, the thing which applied the most tension to the European countries were the alliances between the major powers in Europe. This is because by dividing Europe into 2 different divisions, the

"Women's Rights" The Essay Explains The Way Women In The Early 20th Century Were Segregated, And What They Did To Earn There Rights They Have Today

555 words - 2 pages opportunity and advancement in their lives. Even though there were many laws prohibiting women from working they still came through for our country (Walker, pg.2). For once women were looked at as producers and not reproducers.After the war the men had returned home and back steps began to take place with the women. In 1945, 3/4 of the women polled by the Women's Bureau of the Department of Labor wished to continue working which showed their interests in