The Pros And Cons Of Highly Paid Ceos

I do believe in promotion and the gradual growth of wealth as a person progressives up a company, but it has gotten severely out of control. In the U.S. the top 1% of the population makes up 20% of the total income and 35.6% of all private wealth. The gap between workers and CEOs has only widen over time and CEOs today make 335 times more than the average worker. Productivity has continued to trend upward, while hourly

In “The Overpaid CEO” Susan Homberg and Mark Schmitt bring to attention how CEO pay in America is ridiculous in numbers as opposed to other parts of the world. Looking back, in the nineteen hundreds CEO pay was relativity average. As businesses and companies began to expand there was a demand for higher pay. Between 1978-2012 CEO pay increased by 875%! Many rules and regulations were put in to place to limit the pay of a CEO, such as the Securities Exchange Act that I will explain later on, regardless CEO pay kept getting higher and higher as many loopholes were found. Bonuses pay a large part in the salaries of CEOS’, as an effect CEOS’ tend to partake in risky behavior in order to score those big paychecks.

This paper will discuss the reasons why CEOs are not being overpaid. It will apply the utilitarian ethical principle to many a few aspects to CEO compensation and whether or not it is justifiable for such pay. The paper will look at whether or not their performance is justifiable for the pay because they play such a big role in the livelihood of the company along with the principle agency theory and how it is being addressed for the benefit of the shareholders and others involved with the company, the supply and demand of the CEOs, and the paper will describe the comparison of other professions to help link the idea of CEOs being fairly compensated.

Executive Compensation. I’m in agreement with Thomas Piketty that the one cause of rising inequality in the United States “the rise of supersalaries” for top executives (Piketty & Goldhammer, 2014, p. 298). The average American estimates CEO to worker pay ratio at about 30-to-1, which is more than 4 times what they believe to be ideal. The career review site Glassdoor reported from 2014 data that the average pay ratio of CEO to median worker was 204-to-1 and that at the top of the list, four CEOs earn more than 1,000 times the salary of their median worker with the very top pay ratio of 1,951-to-1. In some cases a CEO makes in one-hour what it takes the average employee six-months to earn. In comparison, the Washington Post reported for the

According to the Wealth Inequality in America video, the CEO of a company makes 380 times more than the average paid worker. With these numbers, the average worker must work over a month to make what the CEO makes in an hour. That’s insane, there is no way that the average worker does not work as hard as the CEO of the company works, the workers are what make the company what it is. Sure the CEO has worked very hard to get to where they are in the company, but with the way everything else is, can we truly be sure that the way the CEO is getting paid is

Throughout the years, the gap between the poor and the rich has only increased. The wage percentage has decreased, while the productivity percentage has increased. During recent years, the wealthiest of the American population, also known as the top 20%, control over 80% of the American wealth, while the “poorest of the poor” barely control 5% of the wealth. An example of this income gap would be CEO of companies and their

According to a news report written by Catherine Ruetschlin, explains everything needed to know about the economy and the CEO-to-worker pay with the failure it holds. “The report, by the public policy group Demos, concludes the fast-food industry has the most extreme pay disparity of all the sectors in the U.S. economy, with a CEO-to-worker pay ratio now exceeding 1,000 to 1. By comparison, the ratio in the retail sector is about 304 to 1, meaning the CEOs in this sector make about 304 times the income of the average worker. And construction company CEOs make about 93 times that of the average worker.” These companies with extreme pay disparity won’t be losing any money if they raise their minimum wage to $9. The comparison of how much a CEO makes to an average worker is ridiculously large, and the fact that some of these CEO’s are complaining about paying their worker an extra two dollars an hour for their efforts and labor is

CEOs usually get paid a lot more than any of their employees and it is believed that the ratio between the CEOs salary and the average employee salary has continued to increase throughout the years (Mackey, 2014). The increase in the CEOs salary is mainly attributed to two factors: First, the required skills and the high responsibilities that are associated with this position. Second, the number of qualified people who could fill such a position is really limited (Executive Compensation, n.d.). This does explain the

Steve Jobs and Kanye Wests’ names are synonymous with innovative technology and award-winning music, but following these enormous reputations are larger-than-life egos. In today’s highly-competitive society, it seems as if big egos are the norm rather than the extreme, with many individuals gaining an overly dominant and unhealthy belief of self-importance that devalues organizations and teams. This notion has been quantitatively proven in a study by Michael Cooper that determined “CEO pay is negatively related to future shareholder wealth changes for periods up to five years after sorting on pay”, in other words, despite the poor performance of their respective companies, CEOs get paid even higher than normal. Though choosing status over results has never been an experience I’ve personally had, choosing status over other important things like happiness and friendship are. These temptations

However, not many studies have made it clear as to how wide is the gap between CEO pay here in America compared to the minimum wage worker and how does this gap compare to other countries. There is an article called CEOs Get Paid Too Much, According to Pretty Much Everyone in the World by Ms. Gavett. The article is interesting to point out the differences in CEO pay gaps according to the minimum wages around the world. The article also gives what many people perceive as an ideal pay gap between the wealthy and poor around the world. I was not surprised to see that the America CEO pay gap is the highest in the world and by a large margin.

Many proponents of capitalism argue that the wealth is shared with the workers. But is it true? According to an annual report in 2008, an average American CEO makes as much money in one day compared to what an average worker earns in one year1. And the disparity between business leaders and average workers continues to grow over time. From 1990 to 2005, the CEO’s salaries increased almost 300%, while a worker received a scant 4.3%2. The social consequence of this disparity is the concentration of wealth on a small percentage of population.

“In Japan, a typical CEO is well paid, but he or she earns only 11 times what the company’s average worker earns.” (Bredeson) “In the United Kingdom, the multiplier is 22.” (Bredeson) “In the United States, the multiplier is substantially higher, a generation ago; it was already 40 times the average worker’s salary. Currently, it is 150-200 times higher.” (Bredeson) I believe that this is outrageous and that no CEO or executive level employee should make anywhere near 150-200 times more than the average worker’s salary and even more so for non-profit company’s. I believe it should be closer to the other average amount that a typical CEO is paid, like Japan and the United Kingdom receive because they are working hard but they do not need a salary 150-200 times more than the average employee. It is a myth that Non-profits are mainly staffed by volunteers. In fact “most non-profits are staffed by paid professional staff. Some organizations also employ volunteers in addition to their paid staff, but many don’t use volunteer help at all, preferring instead the accountability of paid full-timers.” (Green, A) It is also a myth that caring about money is frowned upon. “It’s the organization itself that isn’t making

There is currently a large wage gap between CEO’s of a company and the regular workers. Companies are not investing their profits in better technology or hiring new employees. This is having a profound negative effect on our economy and creating greater social inequality in our country. So far, strikes and protests by workers have had no effect on corporate compensation practices. Economic prosperity does not trickle down from the wealthy to the lower and middle classes. People need to rally and have their representative pass legislation that will cap executive salaries and increase minimum wage.

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

In 2003 the average pay for CEOs at 200 of the largest U.S. companies was $11.3 million--but there are a good number whose compensation packages approach the $100 million mark. Faced with these figures, Americans from all walks of life--who revile CEOs as greedy fat cats--are overcome with bewilderment and indignation. Astonished to learn that what an average worker earns in a year, some CEOs earn in less than a week--people ask themselves: "How can the work of a