Most Ceos Are Ethical, Michael Eisner And Frank Wells

Can the large salaries of CEO be justified morally? Is this fair from the perspective of distributive justice? Give reason why it is fair or not fair.

Otto and Anastasia are a bonobos from the book Endangered. These two bonobo are different from the other ones in the sanctuary. Otto and Anastasia are different in various different ways , although still surprisingly alike. To begin with Otto was treated ineffectively.Otto was started as an abandoned bonobo. His owner was cruel to him didn't take the time to care for Otto. Due to Otto's owner selflessness, he actively seeks poor Otto original home . Sophie was the one that took him in. She notices the walked falter or unsteadily as the result of how weak he was. Sophie was the one owner that has fixed up Otto, including getting him healthy. Otto was delighted to be with Sophie. War broke in the capital, which was when Sophie and Otto began their journey of survival. In conclusion the war was over. Time flew by and Otto had a family of his own and so did Sophie.

It is with this background of wide discrepancies in compensations between executives and other employees and the fact that executive receive huge compensation packages despite their performance that critics have raised the issue of equity and ethical concerns. The free market system has a culture of rewarding employees based on their ability, merit and performance but executive compensation defies this culture (Mullins, 2007). The equity issues are compounded considering that in countries such as America many workers earn in a year what there bosses earn in an evening (Mullins, 2007). Even among stock investors and anti-globalization campaigners, the issue of pay package is a shared concern with claims that executives pay is extremely high. Recent examples include Freddie Mac CEO, Richard Syron, who received $14.5 million in 2007 and where $2.2 million of this amount was a “performance bonus” (Encyclopedia of Management, 2009).

Lawrence Journal World states that” a new Institute for Policy Studies report we helped prepare, top American CEOs took home 319 times the typical U.S. worker annual wage” (Collins & Pizzigati, 2009). I know that CEO’s should get paid more but the salaries are ridiculous. “An ethical manager would put himself in the place of his employees and ask himself what compensation he, as one of his employees, would find appropriate” (Markgraf, 2011).” Employees expect managers to be paid more and top executives to be paid several times their own salary but levels of over 100 are unreasonable from an ethical point of view” (Markgraf, 2011). “For a company with four organizational levels, for example department manager, division manager, vice president and president, the

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

In 1993, Michael D. Eisner of Walt Disney fame received $203 million as executive compensation. Although this award was inflated by Eisner 's exercise of stock options, many examples of compensation in millions and tens of millions raise questions on how CEOs should be paid. Critics dispute that CEOs are deserving of their pay. CEOs downsize companies or perform badly, yet continue to draw a substantial salary. Unlike low level managers, it seems there is no formula for executive compensation. The disparity between the executive pay in US and that of in other industrialized nations is great, furthering the belief that there is no rational (?) basis for compensation. Among sports and entertainment figures, there exists a

Excessive top executive pay is viewed by the public as a direct linkage to economic inequality or disparity. Many opinions state that over the top pay stemmed from compensation trends and indicates corporate Board of Directors as business people earning similar salaries as top executives. Pozen and Kothari (2017) reported “More than 95% of the time, shareholders overwhelmingly approve the pay recommendations.” (Decoding CEO pay, para 2). Excessive pay distorts the views of the public and injures the trust of American workers. According to Pozen and Kothari (2017), companies, legislation, compensation committees, and stakeholders need to clearly articulate the basis of their decisions for setting excessive compensation.

Because of their compensation sets the pattern the criticism particularly focus on the CEO’s high pay as well. Just like the previous criticism, there are current complaints which focused on at least two issues: Executives are paid too much and because the connection between executives current incentive-pay schemes are flawed. Because of these issues the company performance at best is mixed and at worst has led to a series of dysfunctional behaviors (Lorsch & Khurana, 2010). As the pay gap between chief executive officers and American workers of public companies grow; the question has aroused as to what drives the pay of the CEO’s and what’s behind the disparity. It is a known fact that it is a big disparity between the pay of other worker and the CEO pay in corporate America but what is the reason this disparity exists? The first major justification is an incentive for performance that is put forth by corporations; this helps explains the CEO pay level. They thought in order to attract the right candidate who will impact the performance of the organization is that they have to pay big. If this happens the shareholders of the company can get a better return on their investments. What has been justified as compensation for executives is to provide them with some form of stock grants as a form of incentive with

In the article, “Wages of Failure: The Ethics of Executive Compensation” General Global is faced with a complex decision after new CEO, Janice White, requests to be paid based on performance. Her predecessor, former CEO Bill Hogson, seemingly underperformed for the company for nearly a year and stepped down with a huge exit package totaling $100 million (two years salary with bonuses). This caused an outcry by the press for less greed among America’s corporate executives. Janice White, formerly CFO of General Global, feels that by changing the companies pay policy to pay the CEO based on performance would increase stakeholder faith in the corporation. By being paid based on merit rather than by a market based industry standard would

cannot overpay a good CEO and you can 't underpay a bad one. The bargain CEO is one who is unbelievably well compensated because he 's creating wealth for the shareholders. If his compensation is not tied to the shareholders ' returns, everyone 's playing a fool 's game." Today, the dot-bomb, the telecom bust, and the corporate accounting scandals seem to have done for that logic what "Chainsaw Al" did for Sunbeam. The value that many superpaid CEO

First is the evident high compensation that Nortel’s executives received. Its CEO, John Roth, collected pay higher than his contemporaries from other companies and was also incredibly way above the industry average (Fogarty, Magnan, & Makarian, 2011). Executive compensation must be one of the significant issues to be given attention by a company to ensure its ethical performance, wherein there must be a salary cap no more than 19 times of the average employee salary (Collins, 2011). It should

Clearly, the implication of previous paragraphs is that the phenomenon of exorbitant CEOs’ pay is the epitome of capitalism at play. In a world of capitalism, in which market force dominates, it is certain that the capable people should always be rewarded substantially. The argument of capitalism for CEOs’ excessive pay may be shrewd, but it faces a torrent of questions and criticism. Admittedly, American public well tolerate the enormous money and wealth the rich and powerful amass as long as they play fairly. However, American public right now is very furious when knowing that the wealthy and powerful CEOs have manipulated the system and raked in money way out of all proportion. There are a number of sound reasons why the excessive CEOs pay angers American public.

Even though many CEOs have taken pay cuts in the recent years, their compensation packages are still enormous. Studies by BusinessWeek and other publications show that compensation for big company CEOs was more than 400 times the pay for average workers last year, up from a 42-to-1 ratio in 1980. If the minimum wage had gone up at the same rate, it would have been more than $22 an hour in 2006 instead of $5.15. There are many models to explain such a disparity. One of them is a “tournament model” according to which a substantial pay differential may exist to serve as an incentive for employees to work hard to climb the corporate ladder. Average employees expect that they can become a CEO and will make an extraordinarily large sum of money. Therefore they willingly accept wages lower than their marginal product in the early stages of their careers in exchange for the opportunity to receive a high pay in the future.

The compensation of chief executive officers and the methodology used to determine it has become a major topic of debate in the business world. Many people wonder not only why and how it has gotten to be so high, but also why it isn’t distributed amongst other major contributors inside the company, or even amongst the lower ranks of the workforce via an increase in wage rates.  One of the more recent theories that provides an explanation to the increase in the pay of chief executive officers is the size of firms relative to earlier years in business development.  Xavier Gabaix (2006, p. 50), states that his, “central equation predicts that a CEOs equilibrium pay is increasing with both the size of his firm and the size of the average firm in the economy.”  This theory discusses largely that as the scope of the economy increases, it is only natural that CEOs be compensated at a higher rate.  The reasoning behind this is that the CEOs are managing companies of higher value, and thus are in theory putting more work and effort into their companies as well.  Based off this theory, it makes complete sense to do this.  However, I have set out to see if I can discover any other concrete reasoning behind these often astronomical salaries, and if so, determine if this reasoning is useful in determining salaries across a wide range of industries and structures of very successful publicly traded companies.

Over the past 15 years, the compensation of the executives rose to astronomical figures compared to the reality of other countries. With inflated salaries and high bonuses, directors and vice presidents had in their favor the market, so they could choose the employer who paid more. The party is now over. The unfavorable economic scenario that these same professionals who have been targets of true corporate auctions are now in the court of sight.