The Home Depot as the public company for this discussion. Craig
Menear, CEO of The Home Depot until March 2022, had a salary of
$13,059,751 for fiscal year ending 2022 which was 455 times the
salary of the median employee (shown below). This ratio means the
salary of the median employee is about $28,703, which is very low
and would seem very hard to live off of. In addition to a base salary of
$1,300,000, Craig also receives $11,759,751 as stock awards, option
awards, non-equity incentive plan and other compensation (AFL-CIO,
2022). CEOs of large global corporations have major responsibilities,
but the every-day employees are the ones that are assisting all
customers and truly making the sales. CEOs should be paid based off
of experience, but I do not believe they should be paid 455 times
more than the employees that are doing what they can to continue to
make sales and make customers happy.
When executives are offered stock or options, they have more of an
incentive to keep the company successful. When a company is
successful and continues to make a profit, the stock share price
increases. This has the potential to bring in more money for these
executives as the shares of stock they receive would be worth more.
The most effective audit standard regarding executive compensation
and fraud would be auditing standard no. 12 (PCAOB, 2022). This
auditing standard is used to identify and assess risks of material
misstatement of a company's financial statements. Under section 10
of this standard, auditors should complete procedures that include
reading the employment and compensation contracts between an
organization and the executives as well as reviewing the company's
proxy statements and other filings with the SEC (PCAOB, 2022).
References:
AFL-CIO (2022).
Highest-Paid CEOs.
Retrieved September 29, 2022.
https://aflcio.org/paywatch/highest-paid-ceos
Messier, W.F., Glover, S.M., & Prawitt, D.F. (2019).
Auditing &
Assurance Services: A Systematic Approach
(11th ed.). New York, NY:
McGraw-Hill Education.
PCAOB (2022). Auditing Standard No. 12. Retrieved September 29,
2022. https://pcaobus.org/oversight/standards/archived-
standards/pre-reorganized-auditing-standards-
interpretations/details/Auditing_Standard_12
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