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The metrics tied to the CEO’s inventive compensation vary depending on the company, but generally include such items as stock options, long-term incentives and performance bonuses. These metrics are typically sound since they provide an incentive for executives to focus their efforts on achieving specific goals that will benefit shareholders in the long run. For example, if a company has set a goal of increasing profits by 10% over the next year then offering stock options or performance bonuses can help ensure that the CEO is motivated to make this happen.
Whether or not a particular executive is being compensated reasonably depends upon several factors including financial performance and industry benchmarks. If a company is performing well financially then it would stand to reason that its CEO should be receiving commensurate compensation; however if their performance lags behind other organizations in the same sector then there may be cause for concern. Ultimately, it is up to each individual organization to decide what they consider reasonable given their particular circumstances.