In this blog, I will talk more about Executive compensation. Executive compensation is the remuneration package designed for a business’s top chain of command that includes benefits, perks, insurance, and much more.

Looking at the Executive pay video, I was shocked when I saw the gap between the salary of a CEO and a bottom line worker. Furthermore, it’s incredibly shocking that in 29 years, the difference made between CEO and a bottom line worker increased by at least 1000%. The pay gap in 1973 between a CEO and a bottom line worker was 45 to 1 in 1991, this difference jumped to 140 to 1, and in 2002 the difference jumped to 500 to 1, according to the study made by Graeff Crystal. So, looking at these numbers and how this pay gap increased incredibly throughout the years led me to conclude that the executive compensation is incredibly excessive. Yet, their role it’s essential to the business. So, I think that a CEO should be well compensated but not at this scale of 500 to 1. The video states that the CEO’s salary increased over time regardless of whether they were doing a good job or not.

I believe that the main factor that helps explain the rise in executive compensation is the economy; according to Rakesh Khurana, the factors would be leaning in the industry and the year and how the economy is in that year. Another explanation of what can help explain the rise in executive compensation is the stock market boom and that 1900s CEOs had the option of buying their company’s stocks at a price below the standard market price.

The change that should be implied to the executive compensation is the pay compensation. The business needs to regulate the amount earned by CEOs by reformulating the market and bringing their salary back to what is really worth it. I believe the market/ business must reformulate how CEOs are paid. They must go back and reevaluate how much a CEO is worth and then spend the correct value for their position instead of paying thousands of dollars for something that many of the times doesn’t worth half they are making. Also, instead of wasting money on those CEOS, the company can invest that money in areas that are really in need and have better performance/ outcomes than spending an absurd amount of money on one person only.

References:

Public Broadcasting Service (Producer), & . (2002, -12-02). Executive Pay: The Issues: December 2, 2002. [Video/DVD] NewsHour Productions. Retrieved from https://video.alexanderstreet.com/watch/executive-pay-the-issues-december-2-2002

Insperity Staff | Human Resource Advisor Houston, et al. “Pay Compression: What It Is and How to Fight It.” Insperity, 22 Sept. 2021, https://www.insperity.com/blog/pay-compression/.