Ethics in Advertising Agencies-Five Red Flags

Bruno Fagali has written an article in his blog that explains that three of Brazil’s largest corruption scandals involve advertising agencies. As a result of these three scandals and the publication of anti-corruption laws advertising agencies began to implement corporate integrity programs that would comply with the anti-corruption laws. In order for these programs not to be false, it is necessary for companies to carry out a thorough risk assessment. Bruno Fagali believes that during this assessment, a company can determine if there are any red flags. These red flags will determine if there is any unethical conduct or unethical business practices.

Fagali notes that not all red flags will indicate unethical practices, but some situations require stricter rules of conduct that should be monitored. Let look at the five red flags that are found in Brazilian advertising agencies.

  1. Intermediation of Payments by Advertisers

Communication agencies must not stop charging advertisers. Agencies may not divert payments owed to communication companies for advertising.

  1. Media Assignment Criteria

The advertising agency should explain to the company seeking advertisement which modes of communication are available for use. There is some risk of unethical behavior in this. In order to prevent this, the advertising agency should make a media plan and present it to the company seeking advertising.

  1. Incentive Plans

Known by other names incentive plans are so-called optional payments made by communication companies to advertising agencies that have a contract with them every six months or annually as an incentive to keep hiring them.

  1. Business Relationships

There should only be a strict business relationship between all parties. There should not be a friendly relationship of gift giving. It is unethical to exchange gifts, lodging, payments, and travel as perks to obtain contracts.

  1. External Services and Supply Fees

Extra embedded fees called production fees are a red flag.

Fagali notes that the people in charge of corporate integrity programs should make an in-depth analysis to find risks.

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Jeremy Goldstein: Fighting for Stock Options

Over the past few years, corporations decided to stop offering stock options. As anyone older can confirm, stock options used to be the only form of compensation method corporations offered. Recently, the anti-stock options trend has spread all over the country.

While money does play a big factor in business, most corporations are eliminating stock options for more complex reasons. In fact, there are three main reasons they’ve stopped offering stock options. The first reason involves the instability of the stock market itself.

Too often, stock values drop like a rock. That’s not to say that the corporation is responsible, but a lot of factors contribute to a stock’s value. If the value drops too low, everyone loses their abilities to exercise their stock options. Not only can they not use them, stockholders also face option overhang.

That’s one of the many reasons people don’t trust stocks. It’s not just corporations that don’t want to take that risk anymore. Employees would rather have something they have more control over, like cash. If they use their stock options, then they’re worthless and employees are out of a supposedly benefit.

The casino token behavior of stock options also brings a mountain of accounting burdens. Corporations don’t want to deal with all the trouble of trying to give every employee stock benefits. It cost a lot of money and time to offer something most people don’t want anymore. It’s just easier to give higher salaries or something else.

That’s why many corporations started looking into offering equities or better insurance coverage. Those seem more like things people actually want, but lawyers like Jeremy Goldstein advises against making the switch so soon.

Jeremy Goldstein is a respected business lawyer with 15 years of executive compensation and corporate governance experience. He’s New York corporations’ go-to lawyer when it comes to advice about anything related to employee benefits. Currently, a lot of corporations are asking him about which direction they should take modern-day employee benefits.

There’s a reason these corporations are asking Jeremy Goldstein. When he’s speaking or writing about compensation and governance, he’s working on high-profile cases. To date, Jeremy Goldstein has been involved in every big transaction his law firm’s handled. He’s worked with corporations like Verizon, Chevron, and Merck. Learn more: