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This talent does need to be retained.
With respect to the executives who were involved in mortgage-backed securities, however, this argument holds little water. These are not talented individuals, as demonstrated by the substantial losses their actions have inflicted upon the company. They are not the sort of employees that the firm should be seeking to retain. It is only due to the outdated or erroneous perception that these individuals cannot be replaced that they are still valued at all.
Eventually, shareholders will acquire more direct control over executive compensation. Until that time, however, the distortions in the market will still exist, as long as the perception of scarcity of talent persists. As more shareholders re-align executive compensation with long-term results, this perception will diminish. Until then, executives will be paid more than they are worth, putting shareholder value at risk.
Works Cited
Kopecki, Dawn & Goldman, Julianna. (2009). Obama Calls Bonuses Shameful and as Dodd Vows to Reclaim Money. Bloomberg. Retrieved February 27, 2009 at http://www.bloomberg.com/apps/news?pid=20601087&sid=anzJooSeABDM&refer=home
Oliphant, James. (2009) Stimulus' Cap on Executive Bonuses is Too Sweeping, Experts Warn. Los Angeles Times. Retrieved February 27, 2009 at http://www.latimes.com/news/nationworld/nation/la-na-stimulus-executive-pay15-2009feb15,0,7786166.story
Friedman, Milton. (1970). The Social Responsibility of Business is to Increase its Profits. New York Times...
Retrieved February 27, 2009 at http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
Balsam, Steven. (2007). Frontline Reaction to FASB 123(R) Journal of Accountancy. Retrieved February 27, 2009 at http://www.journalofaccountancy.com/Issues/2007/Apr/FrontlineReactionToFasb123.htm
English, Simon. (2002). WorldCom Chief was Aware of Fraud. The Telegraph. Retrieved February 27, 2009 at http://www.telegraph.co.uk/finance/2767881/WorldCom-chief-was-aware-of-fraud.html
Pentilla, Chris. (2009). Rethinking CEO Salaries. Entrepreneur Magazine. Retrieved February 27, 2009 at http://www.entrepreneur.com/magazine/entrepreneur/2009/february/199680.html
Khurana, Rakesh. (2002). The Irrational Quest for Charismatic CEOs. Harvard Business School. Retrieved February 27, 2009 at http://hbswk.hbs.edu/item/3095.html
No author. (2008). Buffett, Munger's Pay Remains Unchanged at Berkshire Hathaway. Sioux City Journal. Retrieved February 27, 2009 at http://www.siouxcityjournal.com/articles/2008/03/18/news_business/local/76a79bd201856f1f86257410000e0a1b.txt
No author. (2004). CalPERS Adopts Plan to Tackle Abusive Executive Compensation. Business Wire. Retrieved February 27, 2009 at http://www.allbusiness.com/labor-employment/compensation-benefits-wages-salaries/5585199-1.html
Odell, Anne Moore. (2007). Shareholders One Step Closer to Having a "Say on Pay." Social Funds. Retrieved February 27, 2009 at http://www.socialfunds.com/news/article.cgi/2284.html
Works Cited
Kopecki, Dawn & Goldman, Julianna. (2009). Obama Calls Bonuses Shameful and as Dodd Vows to Reclaim Money. Bloomberg. Retrieved February 27, 2009 at http://www.bloomberg.com/apps/news?pid=20601087&sid=anzJooSeABDM&refer=home
Oliphant, James. (2009) Stimulus' Cap on Executive Bonuses is Too Sweeping, Experts Warn. Los Angeles Times. Retrieved February 27, 2009 at http://www.latimes.com/news/nationworld/nation/la-na-stimulus-executive-pay15-2009feb15,0,7786166.story
Friedman, Milton. (1970). The Social Responsibility of Business is to Increase its Profits. New York Times Magazine. Retrieved February 27, 2009 at http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html
Balsam, Steven. (2007). Frontline Reaction to FASB 123(R) Journal of Accountancy. Retrieved February 27, 2009 at http://www.journalofaccountancy.com/Issues/2007/Apr/FrontlineReactionToFasb123.htm
English, Simon. (2002). WorldCom Chief was Aware of Fraud. The Telegraph. Retrieved February 27, 2009 at http://www.telegraph.co.uk/finance/2767881/WorldCom-chief-was-aware-of-fraud.html
Pentilla, Chris. (2009). Rethinking CEO Salaries. Entrepreneur Magazine. Retrieved February 27, 2009 at http://www.entrepreneur.com/magazine/entrepreneur/2009/february/199680.html
Khurana, Rakesh. (2002). The Irrational Quest for Charismatic CEOs. Harvard Business School. Retrieved February 27, 2009 at http://hbswk.hbs.edu/item/3095.html
No author. (2008). Buffett, Munger's Pay Remains Unchanged at Berkshire Hathaway. Sioux City Journal. Retrieved February 27, 2009 at http://www.siouxcityjournal.com/articles/2008/03/18/news_business/local/76a79bd201856f1f86257410000e0a1b.txt
No author. (2004). CalPERS Adopts Plan to Tackle Abusive Executive Compensation. Business Wire. Retrieved February 27, 2009 at http://www.allbusiness.com/labor-employment/compensation-benefits-wages-salaries/5585199-1.html
Odell, Anne Moore. (2007). Shareholders One Step Closer to Having a "Say on Pay." Social Funds. Retrieved February 27, 2009 at http://www.socialfunds.com/news/article.cgi/2284.html
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