The company Etsy for their executive pay scales. I chose this company because it is
somewhere that I often shop for original gifts, and personalized mementos, it served as an
area of personal intrigue. From research on Executive Paywatch it appears that the CEO,
Josh Silverman is paid 175 times that of the median employee salary. When looking at the
breakdown it appears that his stock options are well above reasonable. See picture below:
https://aflcio.org/paywatch/highest-paid-ceos at this link you can see the comparison of
CEO salary to the highs and lows of employee compensation at the following
https://www.salarylist.com/company/Etsy-Salary.htm?page=1&order=4.
More than 88% of his salary is in stock awards alone. In my opinion it would be hard for
me to understand a CEO having 88% of his salary from stock options that is not bias on
making decisions that would directly influence that gain.
In direct connection to this example it appears in many news articles that questions arise
over whether Etsy's CEO is overpaid.
https://finance.yahoo.com/news/etsy-inc-nasdaq-etsy-excessively-
141153302.html?fr=yhssrp_catchall
There are here from Blommbergs article (https://www.bloomberg.com/news/articles/2018-
04-20/etsy-rebound-boosts-ceo-silverman-s-stock-options-to-76-
million#:~:text=Josh%20Silverman%E2%80%99s%20efforts%20to%20turn%20around%
20Etsy%20Inc.,at%20%2430.09%20at%202%3A30%20p.m.%20in%20New%20York.)
that the CEO was hired to turn the company around. In doing so they set him up for his
own demise by giving him "3.87 million options when he was named CEO in May"
(Melin, 2018). The CEO did just that and turned the company around to triple the earnings
on the company stock. The cost is the possibility of losing available stock options for
shareholders, the benefit is what happened in this case. It gives the CEO the incentive to
make the company profitable for himself and the other shareholders.
The most effective auditing standards to identify executive compensation is under #12 -
10A. This standard states "the auditor should perform procedures to obtain an
understanding of the company's financial relationships and transactions with its executive
officers " (PCAOB, 2022). By understanding the relationship and how the company
operates financially in regard to the executives, following this trial and examining the
internal controls around this will lead to proper analysis. The auditor will also review
compensation policies in the internal controls to asses the possibility of fraud.
https://pcaobus.org/oversight/standards/archived-standards/pre-reorganized-auditing-
standards-interpretations/details/Auditing_Standard_12
https://finance.yahoo.com/news/etsy-inc-etsy-president-ceo-
221506348.html?fr=yhssrp_catchall
https://www.bloomberg.com/news/articles/2018-04-20/etsy-rebound-boosts-ceo-
silverman-s-stock-options-to-76-
million#:~:text=Josh%20Silverman%E2%80%99s%20efforts%20to%20turn%20around%
20Etsy%20Inc.,at%20%2430.09%20at%202%3A30%20p.m.%20in%20New%20York.
https://aflcio.org/paywatch/highest-paid-ceos
https://www.salarylist.com/company/Etsy-Salary.htm?page=1&order=4
Messier, W., Glover, S., & Prawitt, D. (2019, October 19). Auditing & Assurance
Services: A systematic approach. McGraw Hill. Retrieved September 15, 2022, from
https://www.mheducation.com/highered/product/auditing-assurance-services-systematic-
approach-messier-jr-glover/M9781259969447.html
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