read article and answer question
Ask this question: You are the lead director for a large industrial firm located in the Midwest. You and several other independent directors believe that the government will step in and bail out your company if it falls on hard times, due to its perceived importance in the region. In what ways might this implicit guarantee result in moral hazard on the part of the CEO and other executives? In other words, what inappropriate decisions might the executives make? How would you try to prevent them?
Do peer review of this question: You are the lead director of a public company that runs a chain of fast-food restaurants. Employees and community groups have recently launched a campaign against your company, stating that all employees should be paid a "livable wage." You are guiding the executives to formulate the company's response. What would you do?
Peer’s answer: If I was the lead director of a public company that runs a chain of fast food restaurants launching a campaign stating that all employees should be paid a livable wage, I would first gather a few facts before responding. I would seek to understand the composition of the company's workers. I would gather what demographic of people are working at the company and if any would be considered head of household and therefore a livable wage would be most crucial.
Without having any data, I would assume the majority of people working are teenagers who would not need to make a high wage as they are still living with their parents. For the management positions, I would ensure those carry a higher salary and ensure that opportunities would be available to heads of households needing to bring in more income. That would rationalize for the public that those needing a livable wage could obtain one at the company by moving into management positions and those where it is not as crucial (teenagers etc) could continue to work the minimum wage jobs for now, but could work into management if they wanted to one day. It is not feasible for every employee to make a large salary as that would drive up costs too much for consumers.