Nike to research executive compensation in 2022. According to Salary.com, the Chief Executive
Officer, John Donahoe II, made $28,838,060 in total compensation. Of this unlimited $1,500,000
was received as a salary, $4,450,000 was accepted as a bonus, $6,782,995 was received in stock
options, $12,061,812 was awarded as stock and $4,043,253 came from other types of
compensation. This information is according to proxy statements filed for the 2022 fiscal year.
There are five other executives that make in the millions according to Salary.com. d However,
according to Payscale.com, the highest paid employee with the title of Senior Product Manager
has an average annual salary of $131,289, and the next highest employee with the total Product
Developer makes an annual average wage of $69,881. d The average employee makes .4% of the
executive's compensation. Executives work long hours and some of them sacrifice their families
for their company. d Some executives are well worth getting paid as very highly compensated
employees; however, I strongly agree that companies need to make sure that every employee is
paid fairly.
The benefits associated with compensating executives with stock or the option to purchase stock
are as follows: By awarding stocks, companies provide the shareholders with a part of the
ownership of the company. This is taken by executives as a personal incentive that betters the
company’s performance. Their hard work usually results in higher stock prices which allows them
to cash in handsome amounts of dollars. It is a direct relationship between the value of the award
and the performance of a company's stock price. Employees allow part of their pay to be
contingent on firm performance if they are compensated for the corresponding risk. These are
primarily used as a talent attraction and retention strategy. It serves as a vehicle for the owner to
receive the desired liquidity without selling to a competitor or other third parties.
The costs associated with compensating executives with stock or the option to purchase stock are
as follows: The main disadvantage of stock options is that they dilute the profit per share of
existing shares and the ownership of outside shareholders. Obtaining valuations for Stock options
is usually a costly affair. Attorney fees: The legal team is responsible for preparing plan documents
such as trust agreements, review of the plan’s design for legal flaws, and other tasks. These may
include representing the plan in the event of an audit by tax or labour authorities.
Recurring/Annual costs: These will involve some ongoing annual costs for tasks such as record
keeping, distributing participant account statements, keeping up with regulatory filings, and other
administrative charges.
The most effective audit procedures to use to identify executive compensation abuse or fraud are
as follows: The auditor should perform risk assessment procedures that are sufficient to provide a
reasonable basis for identifying whether the material misstatement is due to error or fraud.
Understanding of the company includes relevant industry, regulatory, and other external factors,
the nature of the company, the company's selection, and application of accounting principles,
including related disclosures, etc., that might reasonably expect to have a significant effect on the
risk of material misstatement. The auditor should obtain a sufficient understanding of each
component of internal control over financial reporting.
Etsy’s CEO compensation for the discussion. d Josh Silverman total compensation for 2021 was
$40,584,292, which includes his base salary of $600,000, stock options of $35,271,412, options
awards of $3,599,940, and other compensation of 1,110,940. d He is being paid 175 times the
median employee in the company.
In my opinion, are the executives worth it? d In my opinion, I don’t believe the CEO should have
such high compensation unless the CEO founded the company and is a “working” CEO. d What I
mean by “working” CEO is one that gets into the details of the company operation and not just a
lot of other executives, vice presidents, directors, etc. d I understand that CEO is ultimately
responsible for the company, the vision, mission, and directives are coming from the CEO, but to
be paid that high of compensation when the median employee is making pennies as a base annual
salary. d For the Etsy CEO, I do not believe he should have a high compensation because Etsy is like
eBay where sellers post items for sale on their website. Etsy does not have its own product to
sell, it is strictly a seller-buyer website.
Compensating executives with stock or the option to purchase stock is a benefit for the company. d
I see it as an incentive for the CEO that if the company continues to succeed, the value of the
stock goes up thus more compensation, based on the stock value, for the CEO. d If the CEO
purchases stock and stock value goes down, then the CEO loses compensation.
An auditor should obtain information for identifying and assessing risks of the company’s financial
relationships and transactions with its executive officers. (PCAOB AS 12.10A). d In addition to the
understanding the company, industry, company’s application of accounting principles, objectives
and strategies, the auditor should also obtain other compensation records such as compensation
meeting minutes or understanding from other senior management regarding the executive
officer’s compensation.).
AFL-CIO America's Union. (2022). Highest-Paid CEOs. Retrieved from
https://aflcio.org/paywatch/highest-paid-ceos
PCAOB. (2022). Auditing standard No. 12. Retrieved from
https://pcaobus.org/oversight/standards/archived-standards/pre-reorganized-auditing-standards-
interpretations/details/Auditing_Standard_12
Salary.com. 2022. Compensation Information. Retrieved on September 29, 2022, from
https://www.salary.com/tools/executive-compensation-calculator/mark-parker-salary-bonus-stock-
options-for-nike-inc-cl-b?year=2022
Payscale.com. 2022. Average Nike, Inc Salary. Retrieved on September 29, 2022,
https://www.payscale.com/research/US/Employer=Nike%2C_Inc./Salary
