Personally, I have never researched the compensation plans that are affiliated with executives compared to normal employees. After watching the video, I found it rigged and unfair in my opinion. I always believed that executives were paid a portion of the total revenue and performance. The idea of executive compensation is “excessive” is relevant. Although executives fairly deserve a higher salary given the importance and experience within the job they provide for a company, I feel that there is no barrier, and overpaying is quite common. Excessiveness is emphasized within the explanation made by a current CEO, Graef Crystal, when he explained how executives were being paid nearly 500 times more money compared to regular employees in 2002. Just imagining working for a CEO at cooperation that is making around 500 times more than I can is unethical.
The biggest factor that helps explain the rise in executive compensation comes from the stock market’s frequent fluctuation. The majority of conflicts that arise regarding executive pay are only from fortune 500 companies. With this, there is an unfair system used where executives can easily purchase excessive amounts of company stock at a bargaining price based on the current stock market at the time. This capability seems to only be available to upper-tier employees and not with the lower-end, reliable employees. In addition, the director of boards inside top-tier companies plays a role in the excessive pay range executives have earned. With the majority of board members consisting of current or past executive members, decisions are only made by the top tier individuals which I feel is unfair and disrespectful to others who work for a company that has no say so in the decisions that are being made. With the surveys that were analyzed in the video, almost all companies wanted to pay above average for the best CEOs available which factors into the pay range with the advanced positioning. The discrepancy that is created heavily favors the slight portion of successful individuals and is extremely challenging for others to ever reach.
The biggest change that should be made to executive compensation is implementing a structured compensation formula that is based on a company’s performance. By CEOs seen as the single most important role for a business for future success, I feel that the salaries they receive should be highly affected by the performance and contributions made by the individual. If a business’s revenue drops one year, I feel that the executives’ salary should also be negatively affected. Another recommendation that I have is that a federal law should be put in place to force top executives to publicly provide their earnings online. The technology advancement seems to create turmoil due to the disclosures provided. Although many executives would be frustrated by making their personal salaries public, I feel that this would motivate employees to work harder and be more productive within the work environment in the company.
