INSTRUCTIONS
REPLY TO 2 of MY CLASSMATE in DISCUSSION BOARD 4
I HAVE TWO DIFFERENT DICUSSION BOARD FOURM FROM TWO DIFFERENT CLASSMATE; REPLY TO EACH CLASSMATE, WRITE ONE PAGE FOR EACH CLASSMARE DICUSSION BOARD FOURM, AND GIVE BOTH CLASSMARE DICUSSION BOARD FOURM THREE REFERENCES. THANK YOU.
For your replies:
- You will reply to 2 classmate. Every reply should advance the conversation further by providing new ideas and insights, asking probing questions that get to the heart of critical issues, and share from one’s personal and professional experience. For the purposes of citations, every reply must include:
- At least 1 scholarly article;
- A relevant business article (any article from a reputable business source—website, magazine, book, etc.—that discusses a relevant business/ethical issue)
Remember to provide new ideas, research, and analysis that create a clear dialogue with your classmate’s ideas. Go beyond providing basic definitions to topics being discussed—that is information that should have been provided in the original post. Your replies should not read as just another thread, nor should it merely regurgitate and restate what your classmate has said, or what you said in your own thread from the week before, for that matter.
FIRST REPLY TO: Dwayne Clark
Dwayne Clark
Liberty University
BMAL 560-DO5 LUO
Dr. Christopher McChesney
December 8, 2013
Provide an example where employee whistle-blowing is justified and an example of where it is not. Provide support for each example. (ch.16)
Since the 1970’s employees have been displeased in the way the company they work for is doing business. These employees have taken a stand to fight for what is right by speaking out to those that listen, reporting to the government, and going to the media. These employees have been given the name whistle-blowers, rat, trader, or snitch. According to Lawrence and Weber (2013) whistle-blowing is, “when an employee believes his or her employer has done something that is wrong or harmful to the public, and he or she reports alleged organizational misconduct to the media, government, or high-level company officials” (p.377). Since whistle-blowing is very dangerous, there are positive and negative things that can come from it. The government has taken a role in protecting those they do speak out against the wrongdoing of their company. On November 27, 2012, President Barack Obama signed the the Whistle-blower Protection Enhancement Act (WPEA) into law, which gives protection to millions of federal workers for their reporting of government wrongdoing (Blaylock, 2012). This act, along with many others, helps employees that want to report wrongdoing by their company easier and safer. Another act that is in favor of the whistle-blowers is the U.S. False Claims Act. According to Kwok (2013), “Under the FCA, private whistle-blowers, also known as relators, can pursue cases alleging contractor fraud against the Federal Government and receive a percentage of what the Government recovers” (Evidence from the False Claims Act: Does Private Enforcement Attract Excessive Litigation?, section: introduction, para. 2). This act is great because of the potential for the whistle-blower to be compensated.
As stated earlier, whistle-blowing is a very dangerous. A whistle-blower must know when whistle-blowing is accepted and not accepted.
According to Lawrence and Weber (2013), “there are four main conditions that must be satisfied to justify whistle-blowing
- The organization is doing (or will do) something that seriously harm others.
- The employee has tried and failed to resolve the problem internally.
- Reporting the problem publicly will probably stop of prevent the harm.
- The harm is serious enough to justify the probable costs of disclosure to the whistle-blower and others” (p.378).
One of the most famous whistle-blower’s is Eric Snowden. According to the Pilkington (2013), “Edward Snowden, the source of National Security Agency leaks, has insisted that he decided to become a whistleblower and flee America because he had no faith in the internal reporting mechanisms of the US government, which he believed would have destroyed him and buried his message forever” (Edward Snowden: US would have buried NSA warnings forever, para. 1). Eric is just one of many whistle-blowers who took a risk to inform the world of a company’s wrongdoing and is paying the price for it because he is in fear of returning to his home country because of what he might think they will do to him.
According to According to Lawrence and Weber (2013), “whistle-blowing is not accepted when employees report whistle blowing for their own self greed such as for blackmailing or to discredit their employees” (p.375). There are times when potential whistle-blowers do it for the wrong reasons. These whistle-blowers think that they can get away with what they are doing because they believe their company is in the process of wrongdoing. What they do not know is that once the truth is out then they will be punished, and the company will be tarnished for having to go through all the legal issues.
Mark Whitacre, Vice President of ADM, spent about nine years in prison after he was charge with a felon for stealing more than a million dollars, after he accused his company that he work for a price fixing scheme (Abkowitz, 2009). According to Ecclesiastes 12:14 (NKJV), “For God will bring every work into judgment, including every secret thing, whether good or evil”. Nothing is hidden from God and when God is ready for a person’s sins to come forth, he will reveal them. Therefore, it is best to tell the truth and not seek any compensation that is not rightfully yours.
References
Abkowitz, A. (2009, September 25). The Informant: ‘I thought I was bulletproof’. Retrieved from htt[://money.cnn.com: http://money.cnn.com/2009/09/24/news/companies/the_informant_mark_whitacre.fortune/
Blaylock, D. (2012, November 27). Presidents Signs Whistleblower Protection Enhancement Act (WPEA). Retrieved from www.whistleblower.org: http://www.whistleblower.org/blog/42-2012/2380-president-signs-whistleblower-protection-enhancement-act-wpea-
Kwok, D. (2013). Evidence from the False Claims Act: Does Private Enforcement Attract Excessive Litigation? Public Contract Law Journal, 42(2), 225-249.
Lawrence, A.T., & Weber, J. (2013). Business and Society: Stakeholders, Ethics, Public Policy (13th ed.). United States of America: McGraw-Hill Companies, Inc.
Pilkington, E. (2013, October 17). Edward Snowden: US would have buried NSA warnings forever. Retrieved from www.theguardian.com: http://www.theguardian.com/world/2013/oct/18/edward-snowden-us-would-have-buried-nsa-warnings-forever
SECOND REPLY TO Bob Dunaway
DB 4
Are U.S. Executives Compensated Too Highly? Why or why not?
Bob Dunaway
BMAL 560 D05
Liberty University
Are U.S. Executives Compensated Too Highly? Why Or Why Not?
This discussion board will look at the question: “Are U.S. executives compensated too highly; why or why not?” This post will defend the idea that executive compensation is too high, due to lack of focus on shareholders and dramatic increase in corporate accounting scandals. Lawrence and Webber state that executive compensation is “the mechanism for aligning the interests of the corporation and its stockholders with those of its top managers” (Lawrence & Webber, 2013, p. 343).
Lack of Focus on Shareholders
Executive pay has been under the microscope. Shareholders’ interests are represented by a board of directors. However, critics of executive pay have argued that boards are no longer negotiating pay packages that are in the best interest of shareholders. Critics argue that excessive pay can be traced to the fact that the members of corporate boards and compensation committees are not sufficiently independent of managerial influence (Labonte and Shorter, 2007). A case in point is cited in Auditing After Sarbanes-Oxley by Thibodeau & Freier which states that in the proxy statement filed in 2001 by Enron they indicated that the compensation committee determined the amount of the annual incentive award by taking into consideration the competitive pay level for a CEO of a company with comparable revenue size, and competitive bonus levels for CEO’s in specific high performing companies (Thibodeau & Freier, 2009).
Americans may be accustomed to the rich getting richer, but the issue of CEO compensation never fails to set them fuming, especially in the post-Enron era. Since 1980, executive pay at big corporations has increased more than six-fold. The Corporate Library, an independent research firm, reported the average CEO of an S&P 500 company made $15.06 million in 2006.
Reports of astronomical payouts to corporate CEOs have led many to question the fairness and effectiveness of the system for setting executive pay,” said New York Democrat Chairman Henry Waxman (Vanderkam, 2008).
Executive compensation is increasingly funded by stock options; a practice frowned upon by everyone from Warren Buffet to the U.S. House Committee on Financial Services (the House Banking Committee). Pumping up stock prices has enormous positive implications for CEO paychecks. The result is a dramatic increase in corporate scandals. Accounting fraud, earnings manipulation, and options backdating may have been motivated by attempts to increase or maximize the share price even if the profits aren’t real and to covertly increase executive pay.
Corporate Scandals
The out-of-control nature of CEO compensation has been spotlighted by a number of high-profile cases. One such was the divorce proceedings against former General Electric boss Jack Welch which revealed a treasure trove of perks from private jets to Knicks tickets. All of these goodies were funded by GE shareholders. Another example is Home Depot’s Bob Nardelli. He helped the company’s split-adjusted share price drop during his tenure, hurting shareholder value.
Finally the practices were demonstrated when WorldCom’s Bernie Ebbers became very wealthy from the rising price of his holdings in WorldCom common stock and got a $1.5 million-per-year pension for bankrupting the company. All of these perks were funded with dollars that could have gone to shareholders. The average shareholder who can’t rely on a company funded-pension or government-funded Social Security is funding the lavish lifestyle of the CEO who will get a pay raise (via stock price increases) for downsizing that worker’s job (Beatie, 2008).
Conclusion
It is evident in the examples above of a lack of corporate governance. However, executive compensation it is a controversial issue when it comes to corporate governance.
Social critics point out that executives are paid way too much, especially in situations where businesses are not profiting. Then again, the thought of having government bureaucrats or lawmakers making decisions concerning pay structures seems to be a serious infringement on freedom and the free market. A far better approach would be to allow social activism to monitor executive pay. Watchdog groups and general pressures of the free market may be the gauge for monitoring exorbitant pay. Fischer says this would be “in keeping with the covenantal notion of sphere sovereignty, where other parts of society beyond government play an active role in balancing the system and making sure that it is healthy, and indeed, making sure that no one segment has too much power”(Fischer, Slide 2. 2011). This can be seen in the biblical concept expresses in Proverbs 20:23, “The LORD detests differing weights, and dishonest scales do not please him” (NIV).
References
Beattie, A. (2009, February 26). Pages From The Bad CEO Playbook. Retrieved December 6, 2013, from http://www.investopedia.com/articles/stocks/08/costs-bad-ceo.asp
Fischer, K. (2011). Presentation 4: The People Side of Business. [Video file] Slide 2. Retrieved December 6, 2013 from http://bb7.liberty.edu/webapps/portal/frameset.jsp?tab_tab_group _id=_2_1&url=/webapps/blackboard/execute/courseMain?course_id=_2056814_1<>
Labonte, M., & Shorter, G. (2007). The Economics of Corporate Pay. Congressional Research Service (CRS) Reports and Issue Briefs. Retrieved from http://digitalcommons.ilr.cornell.
edu/cgi/viewcontent.cgi?article=1035&context=crs
Lawrence, A. T., & Weber, J. (2013). Business and Society: Stakeholders, Ethics, Public Policy, 13th Edition. The McGraw-Hill Companies
Thibodeau, J. C., & Freier, D. (2009). Auditing after Sarbanes-Oxley: Illustrative cases. Boston [u.a.: McGraw-Hill Irwin.
Vanderkam, L. (2008). Cracking the CEO Puzzle: Why Has Executive compensation Exploded In Recent Years? The American, March/April 2008. Retrieved from http://www.american
.com/archive/2008/march-april-magazine-contents/cracking-the-ceo-pay-puzzle
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