HRM 533 Discussion Board Week 8

 

With these different types of compensation there is always the ethical and legal aspect of how they are handled. The Securities Act of 1933 enabled organizations to offer stock as a means of compensating their employees.  However, it did not provide ethical guidance to prevent executives from inflating their projected earnings for the company and then selling their stock at a profit.  Such companies as ENRON and WorldCom had major corporate accounting scandals that where worldwide news resulting in the Sarbanes-Oxley act of 2002.  This law called for enhanced standards in accounting practices for public companies and public accounting firms.  It also required the Securities and Exchange Commission to create regulations that outline exactly how public organizations expected to comply with that law
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