Based off of the video and what we learned this week I personally thing that the majority of executive compensation today is excessive. I do believe that executives should be paid a higher salary because they are more important and have worked much harder than most to get to that position, but at the same time I think it crosses a line when the compensation becomes excessive and over the top. Executive compensation is not only the salary but it also often comes with a package of other benefits like bonuses, long-term incentives, and stock options. Another issue with excessive executive compensation is that it often results in the CEO losing touch with reality and what it is like for not only their workers but the rest of the world who make only a fraction of what they do.
Some factors that help explain the rise in executive compensation is the continuously growing competition for qualified CEO’s and executives. Part of the reason why this is occurring is because many people believe that the CEO is the most important individual to make sure that a company is successful. Another factor that has influenced the increase in executive compensation is that it is not based on a specific formula or set of criteria to determine the appropriate compensation. This results in CEO’s getting paid more and more regardless of their performance or how well the company is actually doing. When a CEO hears of another company paying their executives more it can result in them demanding a higher pay, which basically is due to greed. Another point in the video that I thought was important to mention was that many executives and CEO’s are part of the board so they also get a say in their benefits and compensation.
I do believe that there needs to be changes made to address the excessive executive compensation that has been continuing to grow for many years. I think one possible change that could help make executive compensation more fair and reasonable would be to limit how much they are allowed to make to a certain percentage of the average employee. By doing this it would limit the amount a CEO can make, although it still may be significantly higher there is a cap and in order to go above that you would have to increase the pay for your workers. I think this would not only help bridge the gap in wages but also ensure that the workers are getting raises if the CEO is also.
https://www.cnbc.com/2021/09/15/in-2020-top-ceos-earned-351-times-more-than-the-typical-worker.html
