CEOs in the United States make a significant amount of compensation per year. According to the Academy of Management Journal, “The compensation of the chief executive officers (CEOs) of major U.S. corporations is a subject that receives wide attention.” (Miller 1995) United States CEOs compensation is extremely greater than CEOs in other countries. “The typical CEO of a Fortune 500 company didn't do quite as well, but at $10.8 million didn't do so badly -- that's more than 364 times the pay of an average employee. Forty years ago, top CEOs earned 20 to 30 times what average workers earned.” (Reich 2007) CEOs earn at least one million dollars per year in compensation which is not based on the company’s stock performance.
Personally, high compensation of US executives is not a problem to me. US executives have every right to make how much they make a year. It takes a great deal of work and effort to become a CEO. It is not something that you just wake up to. A person needs the knowledge and experience to become a CEO. They need to build a reputation with the company. It takes long hours and hard work to achieve a position as a CEO. According to the New York Times, “there's an economic case for the stratospheric level of CEO pay which suggests shareholders -- even if they had full say -- would not reduce it. In fact, they're likely to let CEO pay continue to soar. That's because of a fundamental shift in the structure of the economy over the last four decades, from oligopolistic capitalism to super-competitive capitalism. CEO pay has risen astronomically over the interval, but so have investor returns.” (Reich 2007)
Some may feel the high compensation a CEO receives is a problem. “About 80% of Americans polled by the Los Angeles Times and Bloomberg in early 2006 said CEOs are overpaid.” (Reich 2007) If he or she feels it is a problem, the blame lies with the shareholders and boards that knowingly allow the practice, not the CEOs. The shareholders and boards are the ones that are supporting the compensation they are receiving per year. An ethical CEO will not disagree and not accept the pay if it is being given to them. A CEO should feel they earned every penny of what they receive. They should not think they are being unethical in anyway unless they are stealing money from the company or doing some thing to that extent. By CEOs being paid that amount, they are not stealing because without them the company would not be where they are today.
Some may feel CEOs are greedy. Why are they greedy because they are accepting money that they worked hard for? If someone believes a CEO is greedy what about the celebrities and athletes that receive an insane amount of money per year. What do they do that they deserve to be making that amount of money? CEOs at least have a company to represent and manage. What does a basketball player have to do to gain that much money? They only need to make sure they win a game and if they do not they are still making an extreme amount of money. If someone feels CEOs are overpaid they should consider paying attention to others that make more than they do.
Robert B. Reich (2007, September 14). CEOs Deserve Their Pay. Wall Street Journal (Eastern Edition), p. A.13.
Miller, Daniel J (1995). CEO salary increases may be rational after all: Referents and contracts in CEO pay. Academy of Management Journal, 38(5), 1361.
Personally, high compensation of US executives is not a problem to me. US executives have every right to make how much they make a year. It takes a great deal of work and effort to become a CEO. It is not something that you just wake up to. A person needs the knowledge and experience to become a CEO. They need to build a reputation with the company. It takes long hours and hard work to achieve a position as a CEO. According to the New York Times, “there's an economic case for the stratospheric level of CEO pay which suggests shareholders -- even if they had full say -- would not reduce it. In fact, they're likely to let CEO pay continue to soar. That's because of a fundamental shift in the structure of the economy over the last four decades, from oligopolistic capitalism to super-competitive capitalism. CEO pay has risen astronomically over the interval, but so have investor returns.” (Reich 2007)
Some may feel the high compensation a CEO receives is a problem. “About 80% of Americans polled by the Los Angeles Times and Bloomberg in early 2006 said CEOs are overpaid.” (Reich 2007) If he or she feels it is a problem, the blame lies with the shareholders and boards that knowingly allow the practice, not the CEOs. The shareholders and boards are the ones that are supporting the compensation they are receiving per year. An ethical CEO will not disagree and not accept the pay if it is being given to them. A CEO should feel they earned every penny of what they receive. They should not think they are being unethical in anyway unless they are stealing money from the company or doing some thing to that extent. By CEOs being paid that amount, they are not stealing because without them the company would not be where they are today.
Some may feel CEOs are greedy. Why are they greedy because they are accepting money that they worked hard for? If someone believes a CEO is greedy what about the celebrities and athletes that receive an insane amount of money per year. What do they do that they deserve to be making that amount of money? CEOs at least have a company to represent and manage. What does a basketball player have to do to gain that much money? They only need to make sure they win a game and if they do not they are still making an extreme amount of money. If someone feels CEOs are overpaid they should consider paying attention to others that make more than they do.
Robert B. Reich (2007, September 14). CEOs Deserve Their Pay. Wall Street Journal (Eastern Edition), p. A.13.
Miller, Daniel J (1995). CEO salary increases may be rational after all: Referents and contracts in CEO pay. Academy of Management Journal, 38(5), 1361.
1 comment:
I can't agree more-baseball players and celebrities make insane amounts of money, if the Board of Directors determines a fair salary for compensation of running a large organization they should be entitled to it. There is another side to the story with respect to higher executives taking advantage of profits and being paid more than they deserve but checks should be in place with each organization to determine fairness. If returns are higher and businesses are more profitable now than historically, CEO's are entitled to more pay if they are acting in accordance with the law.
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