My view on executive compensation has changed over the years as I become more familiar with company practices and how decisions are made. If you were to ask me a few years ago if I thought that executive compensation was excessive or appropriate, I would have probably said that I thought it was appropriate. I used to think that the more money a person made, the better, and I did not really think about the effects that this could have on their employees or those beneath them.
If you were to ask me that same question now, I would have to say that I find executive compensation a little excessive. According to the video “Executive Pay: The Issues: December 2, 2002,” the wage gap between CEOs and their employees used to be 45 to 1 in 1973. However, in 2002 that wage gap had increased to 200 to 1. I find these numbers to be extremely excessive, because I do not believe that one person should be making 200 times more than their employee.
According to Harvard graduate, Rakesh Khurana, Corporate America has been saying for years that there was going to be less hierarchy and more shared responsibility. This goes against the egalitarian organization that Corporate America has been trying to build. I also find it unfair because there are CEOs who are making millions, even billions, of dollars, while their employees are being paid so much less that they might not even be able to support themselves.
However, I do recognize that leaders should be paid more than their workers because they most likely have a job that is more demanding, I just think that the current high rates of inequality in the pay are too high. If someone works hard for and deserves the compensation they are receiving, then it is more appropriate. I also think that compensation should depend on an individual’s experience and level of education.
I think that there are a couple of components of compensation that would be essential to recruit and motivate executives. One of these would be the size of their bonuses. These are based off of the performance of the company, so they would be inclined to motivate their employees. Another component of compensation that would be important to incoming executives is the compensation package itself. By having a competitive compensation package when compared to other companies in the market, the executive will be more likely to go with the package that they feel will benefit them the most in the long run.
