Benefits Of Being A Top Paid Executive

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Introduction It is a well-known fact that huge sums of money is made by many executives holding high positions in companies. In the United States, it has become a debatable issue as many CEOs are making abnormally more than other employees in the same firm. Some say that they do not deserve the amount of money that they are paid. The people arguing this way feel that for the amount of work that is done by these executives, their compensation is simply too high. They also believe that these overpaid CEOs often do insufficient job, while still managing to reap the benefits of being a top paid executive. Whilst these are viable arguments against this issue, there is other school of thought on the other side of the spectrum who argue that this…show more content…
At this same time frame however, most other workers have face stagnant wages . With these increases in mind, it should come as no surprise that the ratio between average American CEO’s pay and worker pay is now 303-to-1. This ratio is lower than its peak in 2000, when it was 376-to-1, but it’s in excess of the 1965 ratio of 20-to 1 . When these increases are translated into dollars, the difference becomes staggering. In 1965, CEOs earned an average of $832,000 annually compared to $40,200 for workers. In 2014, CEO pay had risen to an average of $16,316,000 compared to only $53,200 for workers . See appendix one for more details on CEOs pay to workers pay ratio. It is quite ridiculous the way it has gone up over the years without bound. Components of CEOs Pay According to Carola Frydman & Dirk Jenter, 2010, CEOs pay has five basic components. They include salary, annual bonuses, payouts from long-term incentive plans, restricted option grants, and restricted stock grants . According to them, CEOs also receive contributions to defined-benefit pension plans, various perquisites, and in case of their departure, severance payments. They were however, quick to add that, the structure has slightly changed over time. This broad pay structure of CEOs make them the highest paid employees in the work place . Who is to blame? Who are we to blame for this disparities in CEOs and common
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