The Salaries Of Chief Executive Salaries

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 pay – excessive pay for top executives is one problem that will not go away. It is a response to public concern about pay rises that are unrelated to effort, plus a number of high-profile cases of failed executives getting pay-offs of up to US $100 million and others having stock options backdated to give them a share of earlier capital gains. This at least tells shareholders exactly what their top executives are earning.

Directors have awarded compensation packages that go well beyond what is required to attract and hold on to executives and have rewarded even poorly performing executives. These executive pay excesses come at the expense of shareholders as well as the company and its employees. Furthermore, a poorly designed executive compensation package can reward decisions that are not in the long-term interests of a company. Excessive CEO pay is essentially a corporate governance problem. When CEOs have too much power in the boardroom, they are able to extract what economists' call "economic rents" from shareholders (Economic rent is distinct from economic profit, which is the difference between a firm's revenues and the opportunity cost of its inputs). The board of directors is supposed to protect shareholder interests and minimize these costs. At approximately two-thirds of US companies, the CEO sits as the board's chair. When one single person serves as both chair and CEO, it is impossible to objectively monitor and evaluate his or her own performance.

Executive's limitation of compensation and peaks is one of interest to me, because its one of my professional career goals to become an executive as I advance further into the hiearachy ranks in my career.

There is much controversy regarding the paychecks of CEOs, people from all over the world think that chief executives are paid too much compared to the salary of the average unskilled worker. These people have a point, as statistics show that the average CEO makes around 350 time the money that an average worker does only in the US, these data is not substantially different if compared to other countries across the globe. Social inequality is a factor regarding these perceptions, the poor are becoming poorer while the rich richer, due to this fact society might regard the salary of such high-ranking corporative officials as exessive. The high salaries endemic to CEOs might show counterproducing, according to a study performed in 2014 by economists Michael Cooper, Huseyin Gulen and P. Raghavendra Rau demonstrates clearly that highly paid CEOs

Clearly, the implication of previous paragraphs is that the phenomenon of exorbitant CEOs’ pay is the epitome of capitalism at play. In a world of capitalism, in which market force dominates, it is certain that the capable people should always be rewarded substantially. The argument of capitalism for CEOs’ excessive pay may be shrewd, but it faces a torrent of questions and criticism. Admittedly, American public well tolerate the enormous money and wealth the rich and powerful amass as long as they play fairly. However, American public right now is very furious when knowing that the wealthy and powerful CEOs have manipulated the system and raked in money way out of all proportion. There are a number of sound reasons why the excessive CEOs pay angers American public.

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

"The problem in America today isn 't that some people are getting rich. We 'd probably all like to be rich. The problem is, most people are getting nowhere,” David Bonior (D-MI) has argued. Why is it that Chief Executive Officers of large companies are making upwards of 500 times more than their average worker? And why are some CEOs only making $1 per year in salary? This paper gives a forefront for different types of CEOs, including big box retail, technology, and mom-and-pop shops, and how their salaries affect those under them.

There are many qualities that lead to how an employee is compensated. They are judged on their efficiency, productivity, compatibility with their fellow coworkers and their ability to generate profit in addition to many other skills required for their position. When companies take into account all of these attributes how do they determine how much money employee should receive? Chief executive officers are responsible for a company’s success or failure, all responsibility is placed on their shoulders, so how much payment should CEO’s receive? According to entrepreneur.com an employee is an investment, “You never want to pay more than the job is worth to you… How much more valuable will this person make my company?” These questions play a pivotal role in deciding an employee’s value. When there are succinct indicators to decide an employee’s salary why would a company continue to overpay their employees?

From the outside of corporate governance, Wright (2004) argues it is a key component of enhancing the country’s financial systems and improving the responsibility to make investors be more confident. In addition, corporate governance is crucial to a business; it is always generated the contradictions between shareholders and professional managers (Thomas &Ward, 2012:p102). O’Donovan claims that corporate governance is an internal management system which involves policies, processes and people - aimed to use good commercial knowledge, objectivity and integrity to serve the demands of shareholders through controlling management events (O’Donovan citied in Thomas and Ward, 2012). The internal management system expresses the command and control mechanism within the business. Therefore, corporate governance involves setting up the rational executive compensation (Hallock and Murphy 1999). The setting of executive compensation is important as a result of providing appropriate motivations to executives and improve their work performance; thus, reducing the contradictions between shareholders and executives (Balsam, 2002). However, Gomez Mejia (1994) argues that a good compensation package can offer welfare to both executives and shareholders; nevertheless, a poor package of compensation is useless to stimulate executives, even a waste of capital resources (Mejia

Chief Executive Officers (which will be referred to as CEOs for the remainder of this paper) is arguably the most prestigious position an individual can hold in the business world. There is no disputing the high level of responsibility necessary to manage the operations and resources of any company, while also being the key figure between the company’s board of directors and the stakeholders which are effected as a result of the company’s actions. Despite the high level of responsibility, it is worth asking a question that has been up for debate not just in recent years, but for the past several decades, which is whether or not CEO compensation can be justified? Just to put into perspective how much one of Canada’s highest-paid CEOs makes,

Executive compensation keeps a highly controversial for recent years, with more credit crisis appears in companies, the action of shareholders’ vote on directors payment get more acception. The new reform act 2013 in the UK gives firm’ owners more power and influence to shape managers’ pay. In fact, this act is not only popular in the uk, also sprung up in other European countries, Australia and USA. In this essay, I will focus on discussing the relation between UK shareholder voting and executive pay. As for shareholders have a binding vote on executive compensation, I think the negative effects overweigh the positive ones. In the following paragraphs, I am gong to describe the benefits and harms.

For somebody who plans on being a CEO one day, knows a CEO, or is wondering what the wages of a CEO are, would be surprised to find out that the average pay of CEOs is $16,316,000. This number is so high because of the numerous tasks that CEOs perform. The job description of a CEO means meeting the needs of employees, customers, investors, communities, and the law. (Lafley, 2009) After I read an article from the former CEO of Procter and Gamble, I understand why CEOs are stressed and face so many difficulties everyday. Paying CEOs a large salary is understandable to a point, however, paying them an average of $16,316,000 is way to high. Should CEOs be paid large salaries because they are stressed constantly and are always on call? Two men,

Each year brings alteration to companies. There has been some good and some bad alterations that have happen within a company. There is one thing that has been constantly alternating over the years and as the company keep moving into the future, there will always be a different outcome. “Over the last several decades, inflation-adjusted CEO compensation increased from $ 1.5 million in 1978 to $ 16.3 million in 2014, or 997 percent, a rise almost double in stock market growth”.[footnoteRef:3] People that are at the top in each company should really see that if this is how they want to run there company. Each company has a choice of how much people should get payed, it just depends on who is running the company. People that work in the top management of the company should look at lots of options and see if they can go over certain things that would help with paying people in the top management area of the company and the people that work within the company that are below them. “It can be especially embarrassing when the CEO doesn’t perform”.[footnoteRef:4] If people are wanting to be the head of their own company, they should