Wages of Failure

1272 Words Jun 14th, 2014 6 Pages
In the article, “Wages of Failure: The Ethics of Executive Compensation” General Global is faced with a complex decision after new CEO, Janice White, requests to be paid based on performance. Her predecessor, former CEO Bill Hogson, seemingly underperformed for the company for nearly a year and stepped down with a huge exit package totaling $100 million (two years salary with bonuses). This caused an outcry by the press for less greed among America’s corporate executives. Janice White, formerly CFO of General Global, feels that by changing the companies pay policy to pay the CEO based on performance would increase stakeholder faith in the corporation. By being paid based on merit rather than by a market based industry standard would …show more content…
This would allow a smaller exit package to still seem lucrative when compared to set base salary, ensuring that poorly performing CEOs would likely take the exit package rather than choosing to stay at the company causing further demise of its worth. In order to ensure that the salary stays competitive with the industry standards the pay scale would have no cap, but would be based on quarterly earnings to ensure that well performing CEOs at well preforming companies are compensated equally to their similar industry peers. Much like other employees within the company, the CEO should expect increased in pay based on merit. Rawl’s theory of distributive justice would back up this notion. In his theory, everyone would have unbiased equal opportunity for success, be fairly compensated for their efforts, and their rewards would also benefit those least advantaged. If the CEO’s salary is higher when company performance increases, the least advantaged within stakeholders within the company (the lowest level employees) will benefit as well by increased job security and future pay.
Another option to look at for General Global would be to deny Janice whites request altogether and continue with their current policy of basing CEO pay on industry standards. This would ensure that company does not undergo a drastic change in policy, possibly avoiding a backlash from stockholders who

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