I definitely think that executive compensation is excessive. I feel that executives should be compensated for their larger share of work, but not to the point that some executives are. For many people, becoming a CEO or other executive position is the payoff resulting from a lifetime of hard work. This should come with a higher set of pay, but I think that when CEO’s start to get paid so much they lose touch with their workers then it goes too far. Jeff Bezos is a clear example of this. He shouldn’t be seen going up to space for 5 minutes with William Shatner while there are employees of his dying, working in a warehouse during a literal tornado because they can’t afford to lose their jobs. Examples like this are why I think executive compensation sometimes goes much too far.
Some factors that explain this rise in executive pay are that there’s no formula for what to pay a CEO, and people have different perceptions of what they should be compensated. It was mentioned in the video that some people think there should be one or two people being paid much more than anyone else at a company. People think that because CEO’s and executives are so instrumental to an industry that they should be paid much more. Although, it was mentioned that there isn’t a correlation between CEO pay and higher profits. The video also mentioned that a factor of this could be a pay structure gone wrong. CEO’s could be receiving profits from the stock market that could and should be distributed to the employees in the company and shareholders. I also found the point in the video that the board is an important component of accountability in a business, and a lot of times the CEO or other executives will be on the board so they’re benefitting double. The final contributing factor to this as noted by Tom Wyman, contagious greed.
I think there should be a way to base specifically CEO’s pay based off of the lowest common denominator. Not like they make this much, but maybe something where they’re only allowed a certain percentage over their lowest paid worker. I understand that this would be controversial upon first glance. However, I think that this would close the increasing gap between employees and executives. This would also ensure that there’s never a CEO that is paid a million dollars a year and has no idea or care for what his workers salaries look like. CEO’s should have a special interest in all their employees. I think basing executive pay off of employees pay would ensure that all employees are compensated fairly, and that everyone at the company has a vested interest in each other starting from the top down.
Sources:
-, Wayne Cooper, et al. “Executive Compensation Mistakes: Stop Treating Everyone Equally.” ChiefExecutive.net, 29 Nov. 2018, https://chiefexecutive.net/executive-compensation-mistakes-stop-treating-everyone-equally/.
“Executive Pay: The Issues.” PBS News Hour, PBS, 2002, https://video-alexanderstreet-com.ezproxy.proxy.library.oregonstate.edu/watch/executive-pay-the-issues-december-2-2002?utm_campaign=Video&utm_medium=MARC&utm_source=aspresolver. Accessed 2022.
Manjoo, Farhad. “Why Jeff Bezos Should Push for Nobody to Get as Rich as Jeff Bezos.” The New York Times, The New York Times, 19 Sept. 2018, https://www.nytimes.com/2018/09/19/technology/bezos-amazon-rich-concentration.html.
Martocchio, Joseph J. Strategic Compensation: A Human Resource Management Approach. Pearson Education, 2020.
