Why Do Executives Receive Such High Compensation And How It Affects Our Democracy?

1982 WordsMay 9, 20178 Pages
Research Paper In any job, there is a pay scale difference between entry level positions to managers and to the highest executives. Many people assume that we are just paid solely based upon our position; where in some cases, not all, this is very true. This paper will focus on the question “Why do executives receive such high compensation and how it affects our democracy?” In corporate America bonuses and compensation differentiate amongst the working forces; the most important factor in the recruiting and hiring process of the best talents are the compensation policies and packages. Also, the attractiveness of salaries and bonuses incentivize potential candidates to seek out these top corporations for employment. Given that the money…show more content…
Discovery Communications is the leader amongst the top four companies that includes companies such as CVS Health, Chipotle, and Walmart, pay their CEOs approximately a thousand times more than their average workers. Due to the severity of this gap in pay even lawmakers and politicians have gained interest into this issue, particularly the democratic party. The way in which they do this is through pay packages. Executive pay packages differs widely from standard salary or hourly employee compensation. Most executives are paid through contingent compensation and structured with rewards. They utilize six compensation components; Base Salary, Short-Term incentive, Long-Term Incentive, Employee Benefits, Perquisites, Severance/Change-in-Control Payments. All six of these components are structured into a pay plan by a corporation or institution’s Compensation Committee. This committee is made up of directors who are handpicked by the Board of Directors. The committee acts independently and works based on a compensation consultant who reviews the recommendations to help manage themselves. Why should we be worried about how much executives make? Why is it a problem to the average person? Executives control our nation 's democracy because of the power and prestige they have, they influence decisions that are made. Paying people by position and performance are understandable factors but when the salary difference is a thousand to a million dollars more there is a clear
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