I think the exorbitant compensation packages CEO’s receive are excessive and unnecessary. In the lecture it said that over the last 40 years, CEO compensation has risen 940% and the typical worker’s compensation has risen just 12%. (Swift 2022)
In this website: Highest Paid CEOs it shows how CEO’s of fortune 500 companies earn 200-2000+ times more than their median worker. Only 41 of these CEOs are women by the way, which is something else that needs to change.
Bob Pavey (the venture capitalist in the video) is an advocate for high executive compensation. His reasoning was especially in regards to entrepreneurial CEO’s because it serves as a motivating factor for other workers to see that this type of earning is possible. However, it’s really unlikely. What would be impactful to more people is fair and liveable wages. I think there should be a limit on the discrepancy between CEO potential earnings and their median worker’s income. This means more of the wealth is distributed to workers and will create higher standards of living for everyone.
One of the reasons to explain the rise in executive compensation is the value we as a society put on leaders. In the expanding business landscape, it is becoming more challenging to find a CEO who is truly a leader and has the best interest of the organization. There is a perception that if you have a better CEO, they should be compensated in alignment with the success of the company. In the video however, it’s said that there isn’t really a link between pay and the performance of the company. The biggest factor for the size of the compensation package is the size of the company. The Harvard professor said that the CEO’s effect is washed out by factors including economic performance and industry type. So in reality, there isn’t a great way to measure a CEO’s effect on profitability. Another big reason for huge pay packages is greed. People equate money with power and reasonably so if you look at how our government is run by capitalism and huge businesses.
I didn’t really mean to go on a rant about this, but with the increasing disparity in economic classes and the impacts COVID has had on people’s livelihood, I can’t see why a CEO legitimately needs to be making millions or billions of dollars.
Sources
AFL-CIO America’s Unions, (2022). Highest Paid CEOs https://aflcio.org/executive-paywatch/highest-paid-ceos
Public Broadcasting Service (Producer), (2002, -12-02). Executive Pay: The Issues: December 2, 2002. [Video/DVD] NewsHour Productions. https://video.alexanderstreet.com/watch/executive-pay-the-issues-december-2-2002
Swift, Michelle, (2022) Week 9 Lecture 2 Executive Compensation
