Executive pay has been a topic of discussion in numerous of my accounting and
is an important consideration in any financial statement audit. Executive compensation,
also known as executive pay, refers to remuneration packages specifically designed for
business leaders, senior management and executive-level employees of a company. It
includes benefits such as salaries, perks, incentives, insurances, etc.
The company I have chosen to analyse is Expedia Group Inc. The CEO of
Expedia, Peter Kern, makes 296,247,749 according to Executive pay watch. He is one of
the highest paid CEOs in the world and he also serves as the Vice Chairman of the
Board. Even though expedient has one of the highest median workers pays with
$102,270, the pay ratio still comes out to an astonishing 2897 to 1. In my opinion, I
believe compensating executives this amount is not worth it. CEOs and executives work
incredibly hard and may have a specific set of rare leadership skills that are difficult to
find in the market place- just like a quarterback in the national football league. There is
very high demand for people who are capable of being the face of a billion-dollar
company and run it well. However, I would argue that people who are not being
compensated the same, work equally as hard and could probably do the same job. I
think the real reason CEO and executive pay is so high is because companies do not
want to send the message that they are led by a weaker CEO. So when one company
raises the pay of their CEO to be slightly above the average, all the other companies
follow suit and slowly the average executive pay rises.
There are several audit procedures surrounding executive pay that would
reduce the risk of material misstatement. For starters, getting a list of related parties and
highly compensated employees is very important for any audit. If upper management
names appear in a loan detail from the company for example the auditor would want to
thoroughly investigate the transaction and make sure it serves a business purpose. In
general, just scanning a list of major transactions for names of highly compensated
employees or related parties is an important audit procedure. Abuse of company assets,
zero interest loans, sketchy related party transactions, and asset misappropriation by a
company official may all be identified through this simple procedure. As the auditor I
would also want a thorough explanation of the company’s process and reasoning for
determining executives' pay.
“Company Pay Ratios: AFL-CIO.” AFL, https://aflcio.org/paywatch/company-pay-ratios
(n.d.). What is Executive Compensation?. TalentLyft.
www.talentlyft.com/en/resources/what-is-executive-compensation
(2021, December 17). SEC.gov. Waivers of Disqualification under Regulation A and.
www.sec.gov/
