Executive Compensation and WorldCom
\nWhen an executive uses company assets to underwrite personal loans, the agency problem occurs as the company takes on debts to provide its executives with higher incomes. In 2001, WorldCom CEO Bernard Ebbers took out over $400 million in loans from the company at the favorable interest rate of 2.15%. WorldCom did not report the amount on its executive compensation tables in its annual report. Details of the loans did not come out until the company’s accounting scandal hit the news late that year.<\/p>\n
In your essay, explain what justified Mr Ebbers to take out the loans from his company? How this example was considered as a conflict of interests. Was the compensation scheme in the best interest of shareholders\u2019? Explain the justification of board of directos to approve these loans to Mr Ebbers and other members. What are the CEOs and shareholders? What alternatives and solutions would you suggest to solve this ethical dilemma?<\/p>\n
Grading criteria:<\/p>\n
Reading list:
\nhttp:\/\/www.nytimes.com\/2011\/11\/08\/opinion\/end-bonuses-for-bankers.html?_r=0
\nhttp:\/\/euractivgreece.blogactiv.eu\/2013\/06\/30\/124\/<\/p>\n
WHAT YOU HAVE TO DO:
\nYou should submit a 1000 words case study report on Principle agent problem in business companies.
\nYou must follow Qatar University\u2019s formatting guidelines and include references. The report will be graded on the detailed criteria outlined on page three of this document. The recommended layout of your report is given in the following bullet points.<\/p>\n
\u00b7 Cover page (your names, date & number of words)
\n\u00b7 Executive summary (A high level summary of the project)
\n\u00b7 Table of contents
\n\u00b7 Introduction (background of chosen banks, firm or institution)
\n\u00b7 What the chosen company is doing regarding your chosen topic.
\n\u00b7 Analysis and evaluation.
\n\u00b7 Recommendations
\n\u00b7 Conclusion (summarize all the above)
\n\u00b7 References<\/p>\n
Your project should be no more than 1000 words (executive summary and any references and appendices do not count towards the word limit).<\/p>\n","protected":false},"excerpt":{"rendered":"
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