“The answer to the question of whether American CEOs are overpaid is clearly “yes”; for those who earn large bonuses and generous stock options when their companies are doing badly, either absolutely or relative to competitors. As mentioned in an article written by Gary Beckner and Richard Posner. This research paper will discuss in details the facts that have been research as to why CEOs are being overpaid. It will discuss the pros and cons of the CEOs salary and compensation and how employees should share part of the profits accordingly.
In the business world of today, one’s pay should reflect the amount of work he or she has done. This rule should apply to all individuals in the workforce including CEOs. However, it is well recognized that there have been doubts on whether some high placed CEOs are being overpaid. A Chief Executive Officer is not supposed to obtain an unusually high salary if his or her company were to file for bankruptcy. According to an online article written by Michael Winter, the Financial Times newspaper stated that CEOs themselves claim that they are being overpaid.
He also states that, “The issue is particularly sensitive because the gap between rich and poor in America has reached its widest point in more than 60 years. ” These results came from a survey that was conducted on the major U. S. business leaders. There has to be a boundary because it is morally and financially incorrect for any corporation or company to continue to operate in such a fashion. These unfair procedures sometimes lead to economic instability or employee strikes. Top CEOs are partly responsible for the welfare of the nation’s economy.
If these CEOs lead their companies to financial distress, then their shareholders will have to suffer due to the loss of money they have invested. According to F. John Reh ( a writer on About. com), In the 1980’s CEOs of large companies made about 42 times what the average employee would make in an hour. He also states that in the year 2000 their salaries escalated to a startling 531 times what the average employee made hourly. It is quite reasonable to suppose that CEOs would understand the value of the Dollar considering the fact that they might have had to work their way up to their current position in the company.
It is sad to see our financial leaders reaping the benefits of other people’s hard work. The world population is dramatically increasing and so is the value of money. It is essential for companies to start realizing that corporate competition is intensifying and that everyone should work for every dollar they make. Economic equality has to be established for the benefit of the society as a whole. Many CEOs do not earn their money. Some CEOs believe that the value of their company is due to their own talent, and that they should not be appreciated.
Down through the years, executives have tried to use the financial success of their company as the base of their compensation. The CEOs compensation package has nothing to do with his/her future performance and the CEO may not make that much of a difference on whether the company is a success or failure. At this point in time, many companies are facing bankruptcy and other companies are losing thousands of dollars on a daily basis. With this said, it is not fair for CEOs to get paid what they use to when the company was standing strong and wealthy.
Unless the CEO is actually taking actions to thrive the company to success, they should not receive a large salary. The companies profit should be divided and contribute to the CEOs and/or employees who are help, care and give a lot the company. REFERENCE: 1. ) Winter, Michael. CEOs Say They’re Overpaid (Seriously), October 15, 2007, Retrieved on April 7, 2008 from http://www. huffingtonpost. com/2007/10/15/ceos-say-theyre-overpaid_n_68573. html 2. ) Reh, F. John. CEOs Are Overpaid, 2008, retrieved on April 6 2008 from http://management. about. com/cs/generalmanagement/a/CEOsOverpaid. htm 1. Cote, Marcel Nov 2007 CA Magizine Vol. 140 Issue 9, p80-80, 1p-Retrieved on March 21, 2008 from http://search. ebscohost. com/login. aspx? direct=true=bah=27434188=ehost-live 3. ) Tobak, Steve. September 12, 2007, “Are technology CEOs overpaid? ” Retrieved on March 26, 2008 from http://www. news. com/8301-10784_3-9776770-7. html 4. ) Brush, Michael (2008). While pensions fall short, CEOs fly high. Retrieved March 27, 2008 from http://moneycentral. msn. com/content/P119362. asp 5. ) Bush, M. : The 5 most outrageously overpaid CEO’s. Retrieved on March 25, 2008 from Moneycentral. msn. com