Question

During the recent economic crisis, many financial managers and corporate officers have been criticized for (a) poor decisions, (b) lack of ethical behavior, (c) large salaries, (d) lucrative severance packages worth millions of dollars, and (e) extravagant lifestyles. Is this criticism justified? Justify your opinion. Step-by-Step ...

Answer 1

During the recent financial crisis, many financial managers and corporate officers have been criticized for (c) Large salaries. This criticism is certainly justified given that most executives received exorbitant compensation despite a plunge in the value of their companies. Thus, their salaries are not justifiable as they are not serving the needs of the shareholders whose interest they should serve.