Sample Paper with Quiz

Below is a sample paper (using MLA style documentation). Click on highlighted sections of the paper to take the quiz. After you click on a highlighted section, you will be given further information about the original source of an idea and asked to determine what (if anything) is wrong with the student's incorporation of the source.

CEOs and the Culture of Greed

[1.] In the 1987 film Wall Street, a rapacious corporate raider named Gordon Gekko made corporate money-grubbing seem to be in the best interests of the economy and America's stockholders: "Greed [. . .] is good. Greed works. Greed is right." Gekko, who argued that running a company to maximize profits would benefit not only the company and its shareholders but also the country at large, was widely seen as correct in the high-flying 1990s. Today, however, things have changed. With corporate scandals unfolding that leave stockholders worried about their retirement funds and fearful of further investments, the time has come to acknowledge that Gekko was wrong about what greed could do for the North American economy. While the business scandals of 2001 and 2002 assuredly had more than one cause, investors--and anyone who cares about the U.S. economy--should take a sharp look at the important role in the wrongdoing played by greedy chief executive officers (CEOs).

As long as the economy was riding high, corporate chiefs were a new breed of celebrity. Jack Welch of General Electric hit the bestseller list with his autobiography, and [2.] Kenneth Lay, golfing partner of presidents, was considered a "guru" as "Enron's share price rocketed far faster than those of other energy companies" ("Kenneth Lay"). And like celebrities, CEOs were, and are, paid well--sometimes almost unimaginably well. [3.] In 2000, the average corporate executive's pay--which as recently as 1980 was about 40 times that of an average worker--had skyrocketed to 531 times the amount paid to a typical worker. Corporate boards are willing to pay top dollar for CEOs with experience; [4.] in fact, they sometimes demand an executive who has previously been a CEO elsewhere, to evade the blame they would incur if an untested CEO did not succeed (Kadlec 52). Of course, a board's decision to pay outrageously for a CEO with a track record--even a failed track record--cannot be blamed on the CEO. However, such decisions have certainly contributed to the view, pervasive among both CEOs and the general population, that CEOs are a breed apart and that [5.] "[t]alented executives are [. . .] rare" (Kadlec 52). And people who believe they are special and irreplaceable are more likely to get greedy.

For a CEO to earn millions per year is not unusual, but the potential for greed to corrupt a business leader enough to bring down a company increases when the CEO also receives stock options--shares of company stock at a set price which can be bought low and sold high when the share prices go up. [6.] Stock options were rarely offered in the past, when CEOs thought of themselves as serving multiple constituencies, including their employees. But to defend against the hostile takeovers of the 1980s, corporate boards wanted desperately to get their stock prices up. The boards wanted executive pay to be linked to the price of the company's stock, going up when the stock rose. Stock options have become a particularly attractive incentive for executives because companies are not required to treat them as an expense. [7.] As Allan Sloan points out, "The fact that options value isn't subtracted from profits has led corporations to give loads of them to CEOs" (45). CEOs love stock options because they offer the promise of reward without the threat of punishment: a CEO whose company's share price falls simply doesn't exercise the options, so he or she loses nothing in a failing company (and there's always the salary to fall back on--and another company to turn to if this one goes under).

What is wrong with the use of stock options as incentives for company performance? The original point of stock options was to ensure that executives hitched their fortunes to those of the company, making the shareholders wealthy along with the CEO when the company did well, which would presumably require the company to offer competitive products or services. [8.] The CEO would thus be transformed from a highly paid manager into an owner "who would keep one eye trained on the stock price" (Lavelle), and greed on the part of the CEO would theoretically make everyone connected with the company happy and rich. Several problems became apparent as corporate scandals made headlines in 2001 and 2002. [9.] First, stock options, which boards have handed out as if they were free, are not without cost to the stockholders: "the more a company issues options, the more it dilutes the value of existing shares," as Lowenstein observes (103). Therefore, rewarding executives in this way hurts small investors in the long run. But the major problem is that the rewards from making stocks go up are so great that many CEOs have apparently decided to exercise their options profitably by any means necessary. In the 1990s, this meant layoffs--stock prices often rose when a company eliminated part of its workforce. This form of greed may have helped shareholders, at least in the short term, but it did nothing to advance the interests of employees. Then another even more damaging kind of greed tempted some CEOs. [10.] "[A] system that lavishly rewards executives for success tempts those executives, who control much of the information available to outsiders, to fabricate the appearance of success" (A23). In other words, as we now know, some CEOs--including those of Enron and WorldCom--made their companies look good through flawed, misleading, or fraudulent reporting of finances. [11.] This kind of greed has often paid off handsomely ("CEO Pay," Gross, Krugman A23). Unfortunately, employees and shareholders lose jobs and their life savings. [12.] The Enron bankruptcy, for example, cost 6100 people their jobs, and people with Enron stock in their 401(k) accounts saw millions of dollars vanish, but Kenneth Lay had the comfort of hundreds of millions of dollars from stock options he had cashed in before the scandal broke ("CEO Pay").

Reforms are possible, and some guilty parties may be brought to justice. [13.] Voters have always been slow to punish the rich because, as Howard Fineman notes, "they'd like to join them" (46). However, few voters really believe that they will someday be paid tens of millions of dollars annually, so greed on the scale recently seen in CEOs of formerly respected corporations only emphasizes the differences between those few and the rest of us. If enough people are angered by what has been done in the name of greed, the stock-price-above-all mentality that Gordon Gekko so heartily approved will doom itself by keeping investors away. Let's hope that happens before the economy suffers even more than it already has.

WORKS CITED

"CEO Pay Doesn't Match Performance." Executive PayWatch.
http://www.aflcio.org/paywatch/index.htm (3 July 2002).
Fineman, Howard. "The Politics of Greed." Newsweek 1 July 2002: 46.
Gross, Daniel. "Give That CEO a Pay Raise!" Slate 16 July 2002.
http://WWW.SLATE.MSN.COM/?id=2067952 (29 June 2002).
Kadlec, Daniel. "8 Remedies." Time 17 June 2002: 51-52.
"Kenneth Lay: The Energetic Messiah." The Economist 3 June 2000.
http://www.rediff.com/business/2000/jun/05enron.htm (27 June 2002).
Krugman, Paul. "Greed Is Bad." New York Times 5 June 2002: A23.
Lavelle, Louis, with Frederick F. Jesperson and Michael Arndt. "Executive Pay."
BusinessWeek Online 15 April 2002.
http://www.businessweek.com/magazine/content/02_15/b3778012.htm
(25 June 2002).
Lowenstein, Roger. "Heads I Win, Tails I Win." The New York Times Magazine 9 June
2002: 102-104.
Sloan, Allan. "Bad Boys Club." Newsweek 1 July 2002: 44-46.

In the 1987 film Wall Street, a rapacious corporate raider named Gordon Gekko made corporate money-grubbing seem to be in the best interests of the economy and America's stockholders: "Greed [. . .] is good. Greed works. Greed is right."

ORIGINAL SOURCE:
"Greed, for lack of a better word, is good. Greed works. Greed is right."

Wall Street. Written by Stanley Weiser and Oliver Stone. Dir. Oliver Stone. Perf.
Michael Douglas. 20th Century Fox, 1987.

What is the problem with this citation?

The in-text citation is incorrect because necessary information is absent.

The works cited page of the paper as it relates to this entry is incorrect.

Quotation marks are used improperly with an altered quotation.

The citation is correct as is; there is no problem.

Ken Lay, golfing partner of presidents, was considered a "guru" as "Enron's share price rocketed far faster than those of other energy companies" ("Kenneth Lay").

ORIGINAL SOURCE:
"Spend long enough around top Enron people and you feel you are in the midst of some sort of evangelical cult. In a sense, you are. Mr Lay, with his "passion for markets", is the cult's guru. His disciples are Enron's managers, an intelligent, aggressive group of youngish professionals, all of whom "get it". The "it" is the rise of market forces in the long-staid energy business.
[. . . .]
"The response from investors has been astonishment, followed by praise. Enron's share price has rocketed far faster than those of other energy companies" ("Kenneth Lay").

"Kenneth Lay: The Energetic Messiah." The Economist 3 June 2000.
http://www.rediff.com/business/2000/jun/05enron.htm (27 June 2002).

What is the problem with this citation?

The works cited page of the paper as it relates to this entry is incorrect.

Quotation marks are used improperly with an altered quotation.

The source's meaning has been changed, so the source has been used inaccurately.

The citation is correct as is; there is no problem.

In 2000, the average corporate executive's pay--which as recently as 1980 was about 40 times that of an average worker--had skyrocketed to 531 times the amount paid to a typical worker.

ORIGINAL SOURCE:
"In 1980 the average CEO made 40 times the pay of the average factory worker; by 2000 the ratio had climbed to 531 to 1" (Kadlec 52).

"According to Business Week, the average CEO made 42 times the average hourly worker's pay in 1980, 85 times in 1990 and a staggering 531 times in 2000" ("CEO Pay").

"CEO Pay Doesn't Match Performance." Executive PayWatch.
http://www.aflcio.org/paywatch/index.htm (3 July 2002).
Kadlec, Daniel. "8 Remedies." Time 17 June 2002: 51-52.

What is the problem with this citation?

The words from the source are paraphrased incorrectly.

The source's meaning has been changed, so the source has been used inaccurately.

The information is too specific to be common knowledge and needs a citation.

The citation is correct as is; there is no problem.

in fact, they sometimes demand an executive who has previously been a CEO elsewhere, to evade the blame they would incur if an untested CEO did not succeed (Kadlec 52).

ORIGINAL SOURCE:
"The problem is that too many boards demand someone who has already been a CEO somewhere else, to avoid the criticism that would follow if a rookie CEO didn't work out" (Kadlec 52).

Kadlec, Daniel. "8 Remedies." Time 17 June 2002: 51-52.

What is the problem with this citation?

The works cited page of the paper as it relates to this entry is incorrect.

Quotation marks should be used with phrases and sentences taken directly from a source.

The words from the source are paraphrased incorrectly.

The citation is correct as is; there is no problem.

"[t]alented executives are [. . .] rare" (Kadlec 52).

ORIGINAL SOURCE:
"Talented executives are not that rare" (Kadlec 52).

Kadlec, Daniel. "8 Remedies." Time 17 June 2002: 51-52.

What is the problem with this citation?

The in-text citation is incorrect because necessary information is absent.

The words from the source are paraphrased incorrectly.

The source's meaning has been changed, so the source has been used inaccurately.

The citation is correct as is; there is no problem.

Stock options were rarely offered in the past, when CEOs thought of themselves as serving multiple constituencies, including their employees.

ORIGINAL SOURCE:
"Executives didn't focus single-mindedly on maximizing stock prices; they thought of themselves as serving multiple constituencies, including their employees" (Krugman A23).

Krugman, Paul. "Greed Is Bad." New York Times 5 June 2002: A23.

What is the problem with this citation?

The in-text citation is incorrect because the parenthetical citation contains errors.

The works cited page of the paper as it relates to this entry is incorrect.

Quotation marks should be used with phrases and sentences taken directly from a source.

The citation is correct as is; there is no problem.

As Allan Sloan points out, "The fact that options value isn't subtracted from profits has led corporations to give loads of them to CEOs" (45).

ORIGINAL SOURCE:
"The fact that options value isn't subtracted from profits has led corporations to give loads of them to CEOs, who make huge profits when the stock rises, but lose nothing when it falls" (Sloan 44).

Sloan, Allan. "Bad Boys Club." Newsweek 1 July 2002: 44-46.

What is the problem with this citation?

The in-text citation is incorrect because the parenthetical citation contains errors.

Quotation marks are used improperly with an altered quotation.

The information is common knowledge, so it needs no citation.

The citation is correct as is; there is no problem.

The CEO would thus be transformed from a highly paid manager into an owner "who would keep one eye trained on the stock price" (Lavelle).

ORIGINAL SOURCE:
"Shareholder activists, institutional investors, and governance experts all viewed them as a way to turn managers into owners who would keep one eye trained on the stock price" (Lavelle).

Lavelle, Louis, with Frederick F. Jesperson and Michael Arndt. "Executive Pay."
BusinessWeek Online 15 April 2002.
http://www.businessweek.com/magazine/content/02_15/b3778012.htm
(25 June 2002).

What is the problem with this citation?

The in-text citation is incorrect because necessary information is absent.

Quotation marks are used improperly with an altered quotation.

The source's meaning has been changed, so the source has been used inaccurately.

The citation is correct as is; there is no problem.

First, stock options, which boards have handed out as if they were free, are not without cost to the stockholders: "the more a company issues options, the more it dilutes the value of existing shares," as Lowenstein observes (103).

ORIGINAL SOURCE:
"Of course, the more you issue options, the more you dilute the value of existing shares, but in the bull market of the 1990s, this was neatly obscured" (Lowenstein 103).

Lowenstein, Roger. "Heads I Win, Tails I Win." The New York Times Magazine 9 June
2002: 102-104.

What is the problem with this citation?

The works cited page of the paper as it relates to this entry is incorrect.

Quotation marks are used improperly with an altered quotation.

The source's meaning has been changed, so the source has been used inaccurately.

The citation is correct as is; there is no problem.

"[A] system that lavishly rewards executives for success tempts those executives, who control much of the information available to outsiders, to fabricate the appearance of success" (A23).

ORIGINAL SOURCE:
"[...] a system that lavishly rewards executives for success tempts those executives, who control much of the information available to outsiders, to fabricate the appearance of success" (Krugman A23).

Krugman, Paul. "Greed Is Bad." New York Times 5 June 2002: A23.

What is the problem with this citation?

The in-text citation is incorrect because necessary information is absent.

Quotation marks are used improperly with an altered quotation.

The source's meaning has been changed, so the source has been used inaccurately.

The citation is correct as is; there is no problem.

This kind of greed has often paid off handsomely ("CEO Pay," Gross, Krugman A23).

ORIGINAL SOURCES:
"[I]n the Enron collapse, [...] executives collected millions from stock sales and retention bonuses" ("CEO Pay").

"Scott Sullivan, the WorldCom CFO who allegedly engineered the misallocation of $3.8 billion in costs, received a 2001 salary of $700,000. However, that year he was awarded 619,140 options with an exercise price of $15.62 - adding to the 2.6 million options he already held. Their potential value dwarfed his salary" (Gross).

"[...]a few years of illusory achievement can leave an executive immensely wealthy" (Krugman A23).

"CEO Pay Doesn't Match Performance." Executive PayWatch.
http://www.aflcio.org/paywatch/index.htm (3 July 2002).
Gross, Daniel. "Give That CEO a Pay Raise!" Slate 16 July 2002.
http://WWW.SLATE.MSN.COM/?id=2067952 (29 June 2002).
Krugman, Paul. "Greed Is Bad." New York Times 5 June 2002: A23.

What is the problem with this citation?

The in-text citation is incorrect because necessary information is absent.

Quotation marks should be used with phrases and sentences taken directly from a source.

The source's meaning has been changed, so the source has been used inaccurately.

The citation is technically correct, but because the information can be considered common knowledge, it needs no citation.

The Enron bankruptcy, for example, cost 6100 people their jobs, and people with Enron stock in their 401(k) accounts saw millions of dollars vanish, but Kenneth Lay had the comfort of hundreds of millions of dollars from stock options he had cashed in before the scandal broke ("CEO Pay").

ORIGINAL SOURCE:
"Company bankrupt, 6,100 out of work and 401(k) participants lose millions. In 2000, CEO Ken Lay exercised $123 million in stock options prior to the accounting scandal" ("CEO Pay").

"CEO Pay Doesn't Match Performance." Executive PayWatch.
http://www.aflcio.org/paywatch/index.htm (3 July 2002).

What is the problem with this citation?

The words from the source are paraphrased incorrectly.

The source's meaning has been changed, so the source has been used inaccurately.

The information is common knowledge, so it needs no citation.

The citation is correct as is; there is no problem.

Voters have always been slow to punish the rich because, as Howard Fineman notes, "they'd like to join them" (46).

ORIGINAL SOURCE:
"They know that voters don't generally hate the rich--they'd like to join them" (Fineman 46).

Fineman, Howard. "The Politics of Greed." Newsweek 1 July 2002: 46.

What is the problem with this citation?

The in-text citation is incorrect because necessary information is absent.

The works cited page of the paper as it relates to this entry is incorrect.

The source's meaning has been changed, so the source has been used inaccurately.

The citation is correct as is; there is no problem.

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