I think that CEOs should not be paid the drastic amounts that they do because even though they might have the capability and leadership to shape the future of the company and are at the top tier of the company, they don’t need all the compensation and could allocate the funds to increasing production and efficiency in the workers and company. They don’t have to strip the CEO of all of their high compensation, but reduce it to benefit the company and reduce the wide pay gap that is deteriorating our society. Once you get to a point of making all that money, a couple million really doesn’t make a difference in executive pay, especially over the years as the executives stay in the company and receive accumulating wealth because of that. They should look to reduce the executive’s pay because, in reality, they aren’t the ones actually doing the dirty work and making the whole system run.
Some factors that contribute to the rise of executive compensation are that they want to obtain the best names for the company and create an image that people would look up to and want to join. As well as the major factors of stock prices and profits, as they increased so would the executive compensation because they would hold a majority of shares. Not basing their executive compensation on pay performance, meaning they would compare the executive’s performance to other companies in their market and justifiably regulate and determine the compensation that way. Another factor is the contagious greed and environment that became acceptable in the CEO facets because since other companies were increasing the pay gap from executives to regular workers then they should as well keep up with the competition. When in reality this was only draining their funds which could be allocated back to the company to help them succeed as a whole, not just one individual person.
Some changes I think that could be made are to adjust the pay scale and reduce their pay to an appropriate amount that reflects their performance and efforts given back to the company. This will motivate them to actually be more involved and influential in the company because they want to see everyone else succeed and perform well, and this will reflect in their compensation if the company is increasing its profits.
