U.s. Securities And Exchange Commission

1660 Words7 Pages
In today’s world, debates over wages and compensation have been a growing topic of concern. Many people feel that they are entitled to earn more than they currently are. The comparison of executive wages and worker wages has created a backlash from the American public due to the extreme differences in pay. The U.S. Securities and Exchange Commission adopted the mandate by the Dodd-Frank Wall Street Reform and Consumer Protection Act that requires public companies to release their chief executive officers pay in relationship to the median compensation of its employees (U.S. Securities and Exchange Commission). Although this regulation does not take effect until the 2017 fiscal year, many companies have previously made this data free…show more content…
In my analysis, I will draw conclusions from scholarly sources and news articles, as well as look at both sides of the matter from different philosopher’s points of view. I will conclude by recommending what I think should happen and look to the future of both scenarios. In order to examine the effects of excessive CEO pay on the company’s stakeholders, one must define the two terms. Russell S. Whelton, a former graduate student at Saginaw Valley State University, defines excessive pay as, “compensation that is 20% or greater than the national average CEO salary” (Whelton 15). Therefore, excessive pay would constitute compensation over $13.8 million per year (Chamberlain). A stakeholder is anyone who is directly affected by the performance of an organization and thereby, holds a stake in that company (Schermerhorn 73). Some examples of stakeholders are directors, shareholders, executive officers, and all employees. It is important to understand why executive officers are compensated at the high levels they are today to determine the benefits and disadvantages of the argument. The purpose of compensation at any higher level is to “attempt to ensure that management actions result in successful performance for the firm” (Ashley and Yang 369). Possible excessive compensation can be a result
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