In todays struggling economy, it is not hard to tell that the CEOs of the largest corporations are making far

too much money. They claim their paychecks are justifiable because of their companys success and inherent to our capitalistic society; but as these corporations become richer they continue to undermine the efficiency of our countrys political system and the common good for our population as a whole. Furthermore, morality has become almost entirely absent in bigger business practice in order to pursue higher profits. Its obvious that restrictions must be emplaced in order to preserve the quality of life for the majority of U.S. citizens and prevent further misappropriation of political resources in favor of giant corporations over the American people. Over the last 30 years, the salary received by the average CEO has increased exponentially. The salary received by the average hourly worker, of course, has not. In 1980, CEOs were paid 42 times the average amount of money paid

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to hourly workers; by 2000 it had grown to a staggering 531 times.1 Its clear that as revenue grows, the pay gap between worker and CEO grows exponentially as well. In a corporation that only generates $5,000,000 in annual revenue, the CEO receives 5.4 times the median pay of all other employees. But in a corporation that generates $2,500,000,000 in annual revenue, the CEO receives 91.6 times the pay of all other employees.2 The gap between the super rich and the rest of our population is wider than ever. This would not be such a monumental problem if the super rich did not have such a powerful voice behind the scenes of our nations politics. With billions of dollars of net worth, giant corporations are able to fund both political campaigns and lobbyists to ensure their agenda is given priority over other options. Giant corporations are making giant donations to political candidates, and these donations create an obvious conflict of interest between the elected officials and...

The question Do CEOs get paid too much? is an extremely debatable question that many people have tried to answer. Of course many CEOs will claim that they work for every single penny of their well-earned pay check. However, if one were to ask an employee at the bottom of the chain of command, Im sure they would respond much differently; and with good reason too. The average pay of CEOs for the top 367 corporations in the United States is $11.8 million. While at the same time, the average pay of production workers is only a whopping $27,460 a year. This means that CEOs get paid 431 times as much as a production worker on average1. The difference between a CEOs and a production workers pay is phenomenal. When asking the question, Do CEOs get paid too much? consider Terry S. Semel, CEO of Yahoo. Semel topped the charts as top earner in the United States with $230.6 million in total pay. Total pay for CEOs calculations includes salary, bonus, and other compensations2. When considering the average CEO pay versus that of a production worker, along with Semels $230.6 million pay, it is hard not to conclude that CEOs get paid too much today. Determining How Much To Pay A Job When debating if CEOs get paid too much, one has to take into account what qualifies a job to get paid a substantial amount of money or a minimum amount. Things to consider when deciding how much money a job should entitle: how much physical effort the worker is exerting for the job, how much the worker is contributing to the firm, the amount of ability, skill, or training the job requires, the jobs difficulty, stress, risk, or unpleasantness it encounters, and finally the degree of responsibility or importance the person has to the company3. However, after analyzing and taking all of these different aspects into account, it seems that a CEO should not...

CEO pay, even among companies whose market share and sales have slipped, is grossly unfair. How bad are things? Here's one wise man's assessment: "About half of American industry hasgrossly unfair compensation systems where the top executives are paid too much," says Charlie Munger, Warren Buffett's partner at Berkshire Hathaway (Kirkland 2006 78). The problem, as many critics see it, is the tremendous gulf between what CEOs earn and what the average worker takes home. At 200 of America's largest companies, CEOs made an average of $11.5 million last year. A worker earning just under $40,000 annually would need 300 years to make that much Overall, average CEO pay is now more than 100 times what the average worker makes. In 1980, it was 33 times average worker pay (Anon 2006 1). Various other studies have confirmed this disparity: In 2005, an average CEO was paid 821 times as much as a minimum wage earner who earns just $5.15 per hour. An average CEO earns more before lunchtime on the first day of work in th

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Class Name: Instructor Name: Student Name: Date: Table of Contents Outline ..3 Top Executives Deserve the Money they Make4 Introduction .4 High Pay Seems Small When Compared To Company Profits..4 Top Executives Are Under a Lot of Pressure5 Pay Should Reflect Performance...6 Conclusions and Recommendations..7 Bibliography 8 OUTLINE This report explores the issue of the pay that top executives make, and the reasons why they do. It also suggests improvements that can be made to make the system better. High Pay Seems Small When Compared To Company Profits Many companies pull in

profits that are extremely high. When an employee of such a companies salary is compared to the amount of profit that the company earns, it starts to seem reasonable. It only makes sense that if the employee is directly responsible for the success of their company, then they deserve to get their payback. It seems ironic, but many salaries even look small once compared with a companies profits. Top Executives Are Under A Lot Of Pressure Being the CEO of a company is not an easy job. There is all kinds of pressure for a person in such a position to succeed. If they do not, then it is their job on the line. Therefore, they deserve to receive a large sum of money for the work that they do. It is the only way to compensate these employees for the tremendous strain that their job puts on them. It is essential that the employees get paid the amount of money that they deserve. Pay Should Reflect Performance When CEOs are being given big paychecks, they are expected to perform at a high level. There success is impeccable. However, this does not always happen. There should be some way of connecting pay to job performance. The best way of doing this would be to award bonuses to those workers who are at the top of their class. This would not only motivate workers to do a good job, but also reward the employees that do succeed. TOP EXECUTIVES DESERVE THE MONEY THAT THEY MAKE INTRODUCTION It is a well-known fact that many people holding high positions in companies make an exorbitant amount of money. Some, however, say that they do not deserve the amount that they are paid. They feel that for the amount of work that is done by these executives, their paycheck is simply too high. Also, they believe that these high paid workers often do a mediocre job, while still managing to reap the benefits of being an executive. While these are viable arguments against this issue, the other side of the spectrum shows that this is not so. There is an equal amount of evidence, if not more, that suggests that executives earn every penny of their paychecks. The CEOs of companies are under an extraordinary amount of pressure. They face the task of making sure that a company pulls in a profit, or possibly losing their job. There are few, if any other positions that put an employee in this situation. Important decisions are made by them everyday, many of which decide whether a company will prosper, or go under. Many of these men had to work their way to the top. They usually have extensive business backgrounds, and know their field well. There are very few people qualified, or

knowledgeable enough to perform well in executive positions. That makes the ones that are, a hot commodity. Thus allowing them to demand the high pay that they earn. High Pay Seems Small When Compared To Company Profits When the public sees a salary that they consider to be too big; they are usually looking at only half of the picture. It is impossible to look at just the salary, without taking any other factors into consideration. One must look at the amount of earnings, compared to the profits of the company. For instance, Robert Allen, who runs ATT, was recently pointed out by 60 Minutes as being an overpaid executive. Their major problem was that he had been responsible for laying off 40,000 employees, while still managing to give himself a large pay increase. At first glance, this situation may appear to be one involving a greedy and overpaid executive. However, upon closer examination, it proves to be much to the contrary. The situation wherein the 40,000 employees were laid off was not a matter of getting rid of people for an unfounded reason. It was more a matter of getting rid of an excessively large work force, and getting the same job done with fewer people. This not only benefited ATT, but also, the customers receiving service from ATT. "For exactly the same service in 1996, the average family will be paying $11 less." This is due to the fact that the consumer's money was not going to a larger number of employees, but going directly to the minimal cost of performing the job. Robert Allen has a total salary of 20 million dollars. This salary seems to be extremely high when put as a statistic by itself. This changes, though, when you compare it to the total earning of ATT. His salary calculates to be 1/3,450 of ATT's gross. All of the sudden, the 20 million dollars does not seem like such a high figure after all. Another factor that serves to make his salary a valid amount, is that even if his total pay was split between all of the laid off workers, they would only receive about $500, not much more than a weeks pay. When all of the cards are on the table, a salary of 20 million dollar starts to look quite reasonable. Top Executives Are Under A Lot Of Pressure Most jobs are clear-cut. A person has a designated task to perform, and the method of performing this task is clearly laid out. If all directions are followed, then there is not too much that can go wrong. This, unfortunately, is not the situation for top executives in companies. They are in the tough position of making decisions that may affect the whole company. With one bad move, they can bring a multi-million dollar business

under. On the same level, though, that can bring in an infinite amount of profit by making a good move. All executives realize this, and this puts an superfluous amount of pressure on them. Most people could not handle this on a day in, day out basis. It would eventually catch up to them. Seeing that one person is given so much power, what guarantee is there that they will do a good job? There is none. That is why there has to be a large amount of money involved. If a person did a job such as this, and received a small amount of pay, then there would not be much incentive for them to do a good job. They could always find another job, with a similar amount of pay, that did not put them under the stress that executive jobs put them under. Once an immense salary comes into play, then that gives a person reason to thrive in such an industry. When a person has a goal such as this, it tends to elevate their performance to a higher level. This means a company succeeds, and pulls in a profit. It seems that whenever money becomes a factor, a much greater importance is put on things, and a much smaller margin of error is tolerated. The top executives are the ones who are affected by this, and it is they who are rewarded, or punished depending on the outcome of their company. US Executives Paid Three Times More Than Other Countries For A Reason US executives receive a substantially larger pay than their worldwide colleagues. One report on earnings showed that "US CEOs were earning 3.2 times more than their British counterparts." This is a tremendous difference, when one considers that these people are doing the same job. This contrast in salaries leads one...
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1. "Rich-Baiting Time," National Review, 62 May 5, 1996 2. "Random Numbers," MacLeans, 42 May 9, 1994 3. "Giving Capitalism An Obscene Reputation," National Review, 35 May 9, 1994 4. "On The Right," Economist, 62 June 3,1995 Share on googleShare on facebookShare on twitterShare on emailMore Sharing Services0 You should cite this paper as follows: MLA Style . EssayMania.com. Retrieved on 08 May, 2012 from <http://essaymania.com/81110/are-ceos-paid-too-much->

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