Are CEO's Paid Too Much? Essay

2654 Words 11 Pages
Are CEO's Paid Too Much?


OUTLINE

This report explores the issue of the pay that top executives make, and the reasons why they do. It also suggests improvements that can be made to make the system better. High Pay Seems Small When Compared To Company Profits Many companies pull in profits that are extremely high. When an employee of such a companies salary is compared to the amount of profit that the company earns, it starts to seem reasonable. It only makes sense that if the employee is directly responsible for the success of their company, then they deserve to get their payback. It seems ironic, but many salaries even look small once compared with a companies profits. Top Executives Are Under A Lot Of Pressure Being the CEO of a
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There are few, if any other positions that put an employee in this situation. Important decisions are made by them everyday, many of which decide whether a company will prosper, or go under. Many of these men had to work their way to the top. They usually have extensive business backgrounds, and know their field well. There are very few people qualified, or knowledgeable enough to perform well in executive positions. That makes the ones that are, a hot commodity. Thus allowing them to demand the high pay that they earn.

High Pay Seems Small When Compared To Company Profits

When the public sees a salary that they consider to be too big; they are usually looking at only half of the picture. It is impossible to look at just the salary, without taking any other factors into consideration. One must look at the amount of earnings, compared to the profits of the company. For instance, Robert Allen, who runs ATT, was recently pointed out by 60 Minutes as being an overpaid executive. Their major problem was that he had been responsible for laying off 40,000 employees, while still managing to give himself a large pay increase. At first glance, this situation may appear to be one involving a greedy and overpaid executive. However, upon closer examination, it proves to be much to the contrary. The situation wherein the 40,000 employees were laid off was not a matter of getting rid of people for an unfounded reason. It was more a matter of getting rid…