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Executive compensation in internet‐related businesses

Mei H. Chen (Department of Management, California State University at Fullerton, PO Box 6848, Fullerton, CA 92834‐6848, USA)
Brian H. Kleiner (Department of Management, California State University at Fullerton, PO Box 6848, Fullerton, CA 92834‐6848, USA)

Management Research News

ISSN: 0140-9174

Article publication date: 1 August 2004

Abstract

This article discusses the pay packages of executive officers at internetrelated business. Generally, the executives’ total compensation include salary, bonuses, commissions, stock options, and other financial compensation, such as forgiveness of loans, automobile expenses, etc. The 70 to 80 percent of the CEOs’ compensations are from gains of exercising stocks. In this tumbling market, shareholders are suffering the loss from the declining stock prices. However, many CEOs are still left with a mountain of wealth. Meanwhile, the board of directors also raises the stock options to retain their top talents even to those who are under‐performing. Besides CEOs’ compensations, we will also compare the CEO pay with non‐CEO pay packages. The CEOs compensations are still the highest. Furthermore, the average CEO made 42 times the average hourly worker’s pay in 1980, 85 times in 1990, and a staggering 531 times in 2000. Many shareholders are against these out of control pay packages. We conclude that it is time to review the process of determining the CEOs compensation, and that the significant presence of pay‐by‐performance should be taken into account in any examination of the practice and regulation of corporate governance.

Keywords

Citation

Chen, M.H. and Kleiner, B.H. (2004), "Executive compensation in internet‐related businesses", Management Research News, Vol. 27 No. 8/9, pp. 84-97. https://doi.org/10.1108/01409170410784590

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited