CEO Compensation Term Paper

Length: 2 pages Sources: 1+ Subject: Business Type: Term Paper Paper: #12935087 Related Topics: Compensation Management, Pay For Performance, Equality
Excerpt from Term Paper :

¶ … seemingly outrageous salaries of many CEOs have sparked a great deal of debate. As CEO salaries reach 532 times that of the average worker, many people note that these exorbitant salaries seem to have little impact on CEO performance. In addition, high CEO salaries are morally suspect, as they are often decided by powerful figures, and reflect a clear economic and social division in a country that is founded upon principles of equality and democracy. Ultimately, typing CEO compensation to worker salary and worker stock options may prove a way to make CEO compensation more realistic and less morally suspect.

In the past decades CEO salaries have escalated enormously. In 1980, the average CEO mad 42 times the wage of the average worker. That figure rose to 85 times in 1990, but by 200, the average CE) made 531 times that average hourly worker's pay (Reh).

Statistics seem to show that CEO compensation is not justified by performance. For example, the total return to shareholders is often higher for companies with CEO compensation under 500,000 USD than for corporations with CEO compensation over that amount (Reh). The belief that...

...

Notes F. John Reh, "CEOs are paid too much. It has minimal effect on their performance. It has no quantifiable effect on the performance of their companies. The only measurable effect is to drive an ever widening gap between the CEOs and the people they depend on to produce results."

There are a number of moral considerations raised by the issue of high CEO compensation. First, it seems morally suspect to pay one individual at a rate that is astronomically higher than other individuals within the same company. This smacks of social stratification and an economic hierarchy that seemingly goes against the grain of the ideals of equality contained in the U.S. Constitution.

In addition, the fact that CEO salaries are set by a compensation committee that contains other chief executives almost exclusively is morally problematic. A CEO's performance impacts a wide number of individuals, from employees to stockholders, and yet these individuals have little say in the compensation of the CEO. This fact certainly seems at odds with the democratic principles held by many Americans. In essence, it hardly seems fair that those people who are most affected by a CEO's actions have the least amount of say in the CEO's remuneration.

Many corporations have tried to reduce some of these criticisms by tying CEO compensation to company performance. As such, corporations are given stock…

Sources Used in Documents:

References

Reh, F. John. CEOs Are Overpaid: CEOs are paid too much for what they do; too much more than their average worker. About.com. 12 May 2004. http://management.about.com/cs/generalmanagement/a/CEOsOverpaid.htm

Jones, Dell. CEO pay takes another hit. USA Today, Posted 3/9/2003 11:34 PM. 12 May 2004. http://www.usatoday.com/money/companies/management/2003-03-09-options_x.htm


Cite this Document:

"CEO Compensation" (2004, May 13) Retrieved August 19, 2022, from
https://www.paperdue.com/essay/ceo-compensation-170999

"CEO Compensation" 13 May 2004. Web.19 August. 2022. <
https://www.paperdue.com/essay/ceo-compensation-170999>

"CEO Compensation", 13 May 2004, Accessed.19 August. 2022,
https://www.paperdue.com/essay/ceo-compensation-170999

Related Documents
CEO Compensation
Words: 839 Length: 3 Pages Topic: Business - Management Paper #: 15677110

CEO Compensation Despite Crystal's criticisms of executives earning outrageous sums of money that are not linked to their performance, the reality is that most executives have a compensation package that is based on performance in some way or another (Codon and Lynch, 2004). However, the use of stock options and other equity-based incentives create enormous incentives to manage the performance of companies for short-term stock price gain. This often comes at

CEO Compensation and a Company's Performance
Words: 2423 Length: 9 Pages Topic: Leadership Paper #: 98647423

CEO's salary, bonus, and long-term compensation with respect to various organizational, financial and CEO factors such as corporate reputation, growth in employees, company size, and return on equity, CEO tenure and CEO stock ownership. In relation to the general performance of the organization This paper utilizes the various measurement of chief executive compensation as exploited by the various detailed pieces of literature and employed as the dependent variable in a

Social Factors Relating to CEO Compensation
Words: 2046 Length: 6 Pages Topic: Business Paper #: 40615261

CEO Compensation The author of this report is asked to answer a few questions and create a tool relating to chief executive officer (CEO) compensation. Of course, there are some traditional trends and factors that usually inform and help calculate what the pay for a CEO shall be. However, there are some people that are clearly outliers to this and some of these anomalous amounts and/or their overall disproportionality to the

Business - CEO Compensation Ethical
Words: 600 Length: 2 Pages Topic: Business - Management Paper #: 8725874

3. Does public awareness of the CEO's salary influence the branding of an organization? How? Give two examples, one negative and another positive. It is perfectly understandable that public awareness of CEO salaries play a role in establishing corresponding attitudes toward the corporate Brand. Where corporations demonstrate socially responsible concern and altruism in the manner exhibited by corporate executives like Bill Gates of Microsoft and Ted Turner, or incorporated within the

Compensation Practice
Words: 1640 Length: 6 Pages Topic: Careers Paper #: 7416079

Verizon Compensation Strategy Compensation Practice Verizon Communications is a publicly traded company registered in the United States as a telecommunications and broadband company. It trades under the name Verizon. It is a market leader in the telecommunications industry and strives to provide excellent services that satisfy consumers. Worker compensation has always been an important aspect of Verizon's overall strategy to keep employees motivated and provide excellent service to consumers. In 2010, the

Compensation Strategies Companies. For Company Selected, Discuss
Words: 711 Length: 2 Pages Topic: Business Paper #: 12414604

compensation strategies companies. For company selected, discuss a 350-word synopsis: • Evaluate compensation strategies executives company. • Evaluate compensation strategies sales forces contingent workers company.ID Compensation strategies for two companies Whole Foods Whole Foods, the organic grocery retailer, is one of the few companies that has actually reported garnering positive press as a result of its executive compensation policy. Whole Foods ' "caps the chief executive's salary and bonus at 14 times