Japanese Corporations American Corporations Vary Term Paper

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The general idea in economic circles is that Japan needs to reform these re-numerations to fall somewhere in the middle, between U.S. And Current Japanese percentages. (Okuda) Some economists also feel that a standardized and reasonable system of re numeration should be employed across the global economy. (Gabaix & Landier) Furthermore, it is also important to note that in a recent study on CEO payment vs. market profit Japan was almost equal to the comparable nations, in the nation's larger corporations. (Gabaix & Landier 22) it is worth asking if all these other nations are also lagging behind in their economic growth because of this profit-based compensation, or because of CEO re-numerations, as some claim Japan is. It would also be interesting to ask if the CEOs and their lobbyists are using a lagging economy as an excuse to further widen the CEO compensation gap, rather than as a tactic to improve the economy.

c. What about the common scenario in which a board of directors in a major corporation chooses to provide bonuses and/or raises to corporate executive officers despite the corporation failing to have a profitable year?

There is a great deal of evidence that profit should to some degree account for CEO and other employee compensation, as employees and CEOs who have the power to increase profitability with good decisions and hard work should be compensated for doing so but again this must be relative to outside forces.

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(Gabaix & Landier) d. What about a board providing bonuses and/or raises to top executives in years in which the corporation was forced to lay off This practice is realistically destructive to corporate social responsibility as well as employee relations, as to some degree earnings of those responsible for major decisions should be based upon the success (profit) of the company. Providing bonuses to CEOs during periods of layoffs gives incentives to CEOs to make layoff decisions based not on the actual need to do so but on the potential for bonus size (especially if bonuses equal or exceed the yearly savings provided by labor reduction.) Employees are much more likely to protest such events in the future, especially following the recent scandals that resulted in the loss of earnings and retirement investments for thousands of employees.

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