NO MORE EXECUTIVE BONUSES!

“The problem isn’t that they are poorly designed. The problem is that they exist”

By: Henry Mintzberg

Published: The Wall Street Journal; June 14 2012; www.onlinewsj.com Alternatively, just google the title and writer’s name.

Level of Difficulty: **

Note to the student: samples of the two writing activities are posted under Sample Essays. It is also suggested that you seek out a video on the issue, listen, make notes and then tackle the reading

BEFORE YOU READ

·         What do you know about executive bonuses?

·         Under what conditions does a CEO get a bonus?

·         What is a golden parachute?

·         What are the effects of executive bonuses on other staff?

·         What are the effects on the long term prospects of the company?

NOW CHECK OUT THE FOLLOWING

Money Matters: The Ethics of CEO Compensation

 https://www.youtube.com/watch?v=JzrSvhap6Ec

Setting CEO Pay Executive Compensation

https://www.youtube.com/watch?v=veplldWz6ng

CEO Pay: How Much Is Too Much?

https://www.youtube.com/watch?v=vtRDRtTJBdY

 QUESTIONS

1.       What is the problem with executive bonuses?

2.       What does “This” refer to in the sentence “This may sound extreme”?

3.       Why exactly is getting rid of executive bonuses the only way to fix the problem?

4.       Whose money exactly are executives accused of playing with?

5.       In what way do executives differ from gamblers who win at poker?

6.       What is a golden parachute?

7.       Why is it wrong of executives to collect a bonus when they sign a merger? Because they …………………………………………………………………………………………………………………………………………..

8.       Why does the writer claim that anyone in the position of executives would take serious risks? Because there is nothing ……………………………………………………………………………………………………..

9.       The writer doesn’t believe the system of executive bonuses can be fixed because ………………………………………………………………………………………………………………………………………………..

10.   The quality of a company’s brands, its overall reputation in the market place, the depth of its culture, the commitment of its people are all examples of …………………………………………………….

11.   What long term damage can financial measures lead to according to the text?

12.   There are two problems with performance measures: the first is the difficulty of …………………………………………; the second is whether when……………………………………………, it indicates, with no room for doubt, the achievement of the CEO.

13.   What is the major downside of attributing the success of a company to one individual; the CEO?

14.   The writer states that bonuses prevent a company functioning at its best because…………………

15.   Why won’t giving everyone bonuses in proportion to their pay work?

16.   How exactly should bonuses be used as a screening tool?

17.   Why?

18.   Barring those who place the highest value on bonuses from taking the top jobs will allow …………………………………….to take over and place the company front and center.

THE FIRST WRITING TASK

Summarize the text in no more than 50 words. You will find an example in the folder titled Sample Essays.

THE SECOND WRITING TASK

Write an essay discussing the disadvantages of executive bonuses. Use the text and any information you have gleaned from videos you watched.It is suggested that you introduce the issue then devote one paragraph to the disadvantages in terms of the leadership and one paragrapgh to the disadvantages in terms of the rest of the staff. End with a restatement

NO MORE EXECUTIVE BONUSES KEY AND TEACHER’S NOTES

This highly topical yet simple and straightforward text touches on an issue that irritates many members of the public. Many find the exorbitant sums being paid out to company directors scandalous so this text should go with a bang. The language is simple but I have paraphrased extensively in the questions to get students used to it. The text also lends itself to some brilliant questions and two lovely writing tasks. I feel the 50 word summary is of vital importance and should not be neglected.

1.       There is no shortage of recommendations for fixing the way bonuses are paid.

2.       Don’t pay any bonuses; OR Scrap the whole thing. However, the former is, grammatically the correct answer.

3.       Because executive bonuses – especially in the form of stock and option grants – represent the most prominent form of legal corruption (that…)

4.       Stockholders’ and the employees’

5.       They collect when it appears that they are winning

6.       The money executives collect when they lose

7.       Don’t know if it will work out

8.       To lose

9.       The system and any proposals to fix it must inevitably rest on faulty assumptions

10.   What accountants call good will; OR its intrinsic value beyond its tangible assets. Just tangible assets won’t do because these are the intangible assets!

11.   The deterioration of the institution. What you get in the text is “the institution deteriorates”; you then need to make this fit the question which begins ‘what’. You, therefore, make it a noun.

12.    Assessing the long term performance of a chief executive; a company’s stock price goes up and stays up for several years

13.   It discourages everyone else in the company

14.   It reinforces a class structure within the enterprise

15.   Who is to come up with the measures to assess performance correctly? OR, how do you ensure that the goodwill is not being cashed in by everyone collectively?

16.   Anyone who insists on them should be dismissed out of hand

17.   Because they are the wrong kind of person. This is the shortest and most all encompassing answer. The rest of the paragraph is all about why they are the wrong kind of person; in other words, it is support.

18.   True leadership; OR engaged leadership