19131[Arg. Essay-Essa-Ceo] EDITED 4189

7/31/2019 19131[Arg. Essay-Essa-Ceo] EDITED 4189

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U.S. CEOs Salaries-2

It is a known fact to everyone that many people holding high positions in

organizations all around the world are getting high salaries. The debate about the high

salaries of executives are still going on after several decades. However, Paredes says that,

Indeed, behavioral corporate finance presupposes that managers are hard-working

and well-intentioned. More to the point, studies have shown that greater accountability

can actually exacerbate cognitive.EXPLAIN HOW QUOTE IS RELEAVNT: to

executives not getting high salaries; or maybe Paredes believes they deserve those

salaries??. Short-term incentives typically only benefit the CEOs, according to some rules

and have several performance factors included according to the role of the executive

(CITATION).The executives are compensated for both cash and companys shares

according to the vesting instructionsWHAT IS THIS? E.G.: Vesting instructions are a

set of rules.This is a witness to the decline of a healthy fair marketing field, in which

CEOs keep all the spotlight on themselves by taking all the credits for themselves, though

this significantly addsto the stockholders value in large organizations; it results in

harming society.Such power is given to these CEOs to the point that they alone decide on

their salaries, in addition, because of their rank financially, it gives them the ability to

make political changes in a society, although that is far from their knowledge basis.

According to Business Week, in 2003, CEOs in 365 U.S. companies earned salaries 301

more times higher than that of what factory workers earned. Between 1991 and 2001, it was

reported that CEOs got a 340% increase in their salaries, along with extra bonuses and grants,

meanwhile factory workers payonly increased by a pathetic 36%(Moriarty, 2005).CEOsdo

not deserve these high payments because they are not compatible with the hardworking

general populations salary, in addition, these sorts of payments raise ethical issues of

fairness, equality and justice.


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The first reason for CEOs not deserving their high payments goes back to the concept

of proper principality, which is a main issue of debate, not only within the media world, but

also amongphilosophers. Corporate disgrace is a common phenomenon seen almost

everywhere nowadays; the 21st

century seems to be composed of innumerous stories of CEOs

caught performing fraud. The notorious Enron Scandal at the end of 2001 in the U.S.,

caused a reaction by who? The nation? That campaigned against the widespread of fraud

by pushing the nation to insist that universities teach mandatory ethic classes within the

business curriculum. **Ideas arent flowing; need to see article.**The goal was to enforce

stronger control on the CEOs and to hold them accountable for any

fraudscommitted(CITATION). CEO scandals and frauds not only affect specific companies,

but they also dampen the whole industry, and worsen the economy. Mel Perel says, The

complex interactive alliance between boards of directors and CEOs compromises rational

decision-making about CEO compensation, with the Enron affair offered as an illustration of

what can go wrong when dishonest CEO actions combine with lax board

oversight.European Journal of Scientific Researchsurvey quoted that Unethical business

deal, which is a negative trait, is an expression of self-centeredness. Another name for self

centeredness is systematic selfishness (Ochulor et al., 2010).

The second reason for why executives do not deserve their high earnings is because of

what this does to the economy. Unnecessarily highly paid CEOs cause companies to go out of

business, along with rejecting internal equity; both of which benefit society negatively. All

throughout American history, CEOs have been the sole reason for the fall of many American

companies due to their unreasonable demand of payment (CITATION). In fact, companies

who are controlled by higher paid CEOs donot do any better or worse than companies who

are controlled by less paid CEOs(CITATION). That statement brings us to the second reason

as to why higher paid CEOs affect our economy today through the lack of internal


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equity.Internal equity is when companies focus on comparing high paid CEOs with that of

everyone else in the organization. As, author, (insert name) states, some CEOs earn tens

of millions of dollars a year for doing the same job as less paid executives in other countries

who have done just as well, if not better, for a fraction of the price(CITATION).Its a

reasonable question for anyone to ask whether a is CEO pay money well earned? (Babones,

2012). The main economic problem behindexecutive compensation design is that firm owners

need to align the incentivesof the executives to their own intereststypically to maximize

firm value (Jarque, 2008).

Third , It is obvious when comparing CEOs incomes to the average employees pay

that it is, without a doubt, unreasonable. They are not being paid what they deserve, which is

unfair whereas company pays their CEOs. A number of surveys occurred since last decades

that presented the clear evidences that CEOs faces 200% more strain and pressure than the

workers and employees in the managerial positions in the same company, which was not

accepted by the most of the workers and the business critics on the global. CEO

compensation cannot justified caused by high difference between CEO salaries and the salary

of a standard worker. She also says that high CEO salaries "bad stewardship of resources"

(Newton, 2000).She also added that the main thing go wrong with the CEO high

compensation, it is awful governance for people to take more than they can use, and unfair

that some people should be earning 43,700 times what other people earn, particularly when at

least some of those other people are starving. According to Francesco Guerrera noted that

CEOs committed that they are overpaid. He also claims that, "The issue is particularly

sensitive because the gap between rich and poor in America has reached its widest point in

more than 60 years".

On the other hand, many believe that CEOs are overpaid due to the services they are

given to the organizations, that a best CEO can change the performance of the company to


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positive, so that a better compensation is required to attract the best talented ones. Also the

CEOs are partly accountable for the interests of the nation economy. If these CEOs tends the

companies to a financial crisis, their shareholders should suffer the consequences of the loss

of money they invested. As for the size of the paycheck, not everyone is qualified to run a

billion dollar Multinational Corporation. The reality is that being a CEO is incredibly hard

and not many people are qualified(Browning, 2008).Kaplan and Rauh (2008) initiate that as

CEO pay has greater than before considerably since the early 1990s, the pay of other experts

and fortunate groups has augmented by as a minimum as much. CEOs are paid due to the

value they added to their organizations. Like compensation system will give a clear image

about what is more important.

In conclusion, while they are in a publicly held corporation, mainly not the owner,top

CEOs and Executives are mostly without doubt overpaid. Definitely it is unfair that the top

people takes all compensations while the average worker treats underpaid, because the tops

are getting over paid for all the hard works done by the people at the bottom who receives

little benefits. CEOs will never overpaid for doing the same job they were doing before, if

their pay is analyzed by what they contribute to the economy. The consequences are

enormous like it will affected to the nation economy badly and also unemployment between

the youths.


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Reference

Babones, S. (2012, March 29). Ceo pay: money well earned?. Retrieved from

http://salvatorebabones.com/ceo-pay-money-well-earned/

Browning, J. (2008, April 18).Executive compensation: Are ceo's overpaid?. Retrieved from

http://voices.yahoo.com/executive-compensation-ceos-overpaid-1382559.html?cat=3

Guerrera, F. (2007, October 14). We are overpaid, say us executives. Retrieved from

http://www.911omissionreport.com/executives_overpaid.html

Jarque, A. (2008). Ceo compensation: Trends, market changes, and regulation.Economic

Quarterly, 94(3), 265-300. doi: 10697225

Kaplan, S., & Rauh, J. (2008). Wall Street and Main Street: What contributes to the rise in

the highest incomes? Working paper, University of Chicago.

Moriarty, J. (2005).Do ceos get paid too much?. Retrieved from

http://personal.bgsu.edu/~jmoriar/ceopay_web.pdf

Newton, L. H. (2000). The care and feeding of the truly greedy: Ceo salaries in world

perspective. Retrieved from

http://www.carroll.edu/msmillie/busethics/protect/careandfeedingoftrulygreedy.pdf
http://www.carroll.edu/msmillie/busethics/protect/careandfeedingoftrulygreedy.pdfhttp://www.carroll.edu/msmillie/busethics/protect/careandfeedingoftrulygreedy.pdf


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Ochulor. Et al., (2010). The place of ethics in business: A case study of lockes

ethics.European Journal of Scientific Research,44(3), 477-484. Retrieved from

http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=b34582a6-e398-4e61-8ea5-

5efba1a7d394@sessionmgr112&vid=2&hid=7

PAREDES, T. A. (2004). Too much pay, too much deference: Behavioral corporate finance,

ceos, and corporate governance. Retrieved from http://law-wss-

01.law.fsu.edu/journals/lawreview/downloads/322/Paredes.pdf

Perel, M. (2003). An Ethical Perspective On CEO Compensation.Journal of Business

Ethics, 48(4), 381-391. Retrieved from http://philpapers.org/rec/PERAEP
http://philpapers.org/rec/PERAEPhttp://philpapers.org/rec/PERAEP

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19131[Arg. Essay-Essa-Ceo] EDITED 4189