Emily’s MGMT 449 Blog

Most executive compensation pay ranges are excessive. As stated in the PBS segment, “Executive Pay: The Issues”, in 2002 CEO pay was nearly 500 times more than the average employee’s pay. There is not a single job in a company where you can compare the responsibilities to a CEO’s responsibilities and that comparison results in the CEO doing 500% more work than the other employee. I agree with the 1973 ratio of 45 to 1 and can even see an argument for the 1991 ratio of 140 to 1. However, I truly believe that 500 to 1 is excessive. In addition, the ratio of 500 to 1 was in 2002, realistically that has only grown and the pay gap increased in the past 20 years. Nonetheless, I would never want to discount the work that CEOs do as being a CEO is a critical role in any company and comes with a significant amount of responsibility. 

One factor that helps to explain the rise in executive compensation is that board of directors in this country are seeking leadership and consider the CEO to be the single most important factor in the future success of that company and they are willing to pay to have an outstanding leader to fill that role. Another factor that helps explain is the constant increase in the size of companies today. Companies are always increasing in size (even over long-term) and with larger companies, CEO’s compensation packages will continue to increase. Thirdly, stock market booms and stock options are another factor.

Changes are needed in the executive compensation realm and each individual company should consider their CEO compensation package separately from their compensation plan that decides the compensation of the rest of their employees. However, executive compensation has no reason to be in the tens to hundreds of millions, specifically when the company is losing profits by the year. My main recommendation is to pay for performance with CEOs. However, instead of literal pay for performance (ie. good performance means more money), I recommend starting at a median salary. If the company does well, each year, then the CEO will receive a bonus. If the company does not perform well that year, then a small chunk of the CEO’s compensation will be taken away for the following year. Of course, there are a ton of trade offs and considerations with this type of compensation structure; however, I do think it would be one worth considering.

It is important to preface that I want to work for a large, established company. And when initially thinking about benefits, I was using the scenario for which benefits I would like Daimler Trucks North America to offer when Igo and work there this summer. 

When initially thinking about the benefits that companies can offer that were most important to me, I thought of maternity leave, health insurance, and dental insurance. These seem fairly obvious as companies that I would want to work for would definitely have this offered to their employees. The lower half of my list included benefits such as educational assistance and paid holidays. 

After going through the lecture material and the chapters, I wouldn’t say that my ranking necessarily shifted, but I definitely would like to add some type of retirement account to my top rankings. More specifically, I would prefer for my employer to offer a retirement account that is portable and my employer matches to some extent. I always knew how important it is to invest in your retirement; however, I didn’t fully understand exactly what the process entailed in doing so. In addition to adding a retirement plan into my rankings, I noticed that my top rankings include mostly all legally required benefits. I did not know –before these lectures– that health insurance and unpaid family and medical leave were legally required. I simply thought that they were benefits that companies choose whether or not to offer their employees. 

One last observation that I had was that workers compensation was not in my rankings at all. While it is a legally required benefit, it is not something that I have really ever considered to be important to me. However, now after thinking about it, I realized that even though I am planning on doing a desk job for the rest of my life, there are still instances where I could get hurt in the office.

In 2021, I interned at an international company in Portland, OR for six months as a Project Management Intern. I absolutely loved this opportunity! For the first month of my internship, I was busy with onboarding, training, getting to know everyone, and everything else new hires have to do. However, as I started getting more comfortable with my new role I began becoming less and less satisfied as the days went by. By the end of my internship, I was so grateful for the opportunity, but was ready to be done.

However, even though I was dissatisfied, I made sure I was logged in everyday, attended all my meetings, and even continued to ask for tasks in my down time. This is the opposite than someone who is unfulfilled with their job would typically act; however, compensation kept me motivated. I was paid incredibly well by this company and felt as if I had an obligation to work as hard as I could, even if I didn’t want to. If I was getting paid less than what I was during my internship, I truly believe that my motivation would have lowered sooner and, by the end, I would not have been still asking for extra projects and attending all of my meetings (including the optional ones).