Question

What are the issues with CEO compensation? Do you agree?

Answer 1

• CEO pay is today so out of kilter with average wages that the negative side effects – demoralization, destroying the sense of community that today’s high-performing organizations need – are beginning to outweigh the oft-stated reasons for paying top money for executives - such as specialized expertise that will propel a company to the top of the heap.
• CEO pay continues to be very, very high and has grown far faster in recent decades than typical worker pay.CEOs in the U.S. are paid much more than their peers abroad, and the gap between their compensation and that of average American workers is wider than in other countries.
• During periods of poor performance and layoffs across the organization and in the absence of a diligent board, high top executive compensation is deemed as outrageous by those impacted by the results.
• Shareholders appropriately rankle at high CEO compensation when? the share price is sinking, and both the employees who lose their jobs and the employees who fear losing their jobs view high top executive compensation as offensive.
• Even nominal or more than nominal concessions by the board and top executives leave these individuals with compensation that seems laughably large to someone who lost their job.
• Executive compensation should be structured to attract talented managerial candidates and align the interests of executives and shareholders. Public corporations are complex entities that benefit society in their generation of wealth for shareholders, provision of employment, and production of goods and services for consumption. A sufficiently high compensation for CEOs and senior executives is therefore, justified.