-
7/31/2019 salary paid to the CEOs- is it justified?
1/16
-
7/31/2019 salary paid to the CEOs- is it justified?
2/16
WHO ARE THE CEOs?
A Chief Executive Officer (CEO) is
Highest-ranking corporate officer or
administrator in charge oftotal management of an
organization.
Reports to the board of directors.
-
7/31/2019 salary paid to the CEOs- is it justified?
3/16
Responsibilities
Primary responsibility:- to facilitate the designand
accomplishment of the mission, vision andgoals of the organization
through effectiveleadership.
Responsibilities as a Communicator Decision maker Leader Manager
executor
-
7/31/2019 salary paid to the CEOs- is it justified?
4/16
Two Decades of CEO Pay
-
7/31/2019 salary paid to the CEOs- is it justified?
5/16
Background
CEOs pay has increased significantly following the
enactment of anti takeover laws passed in 1980s.
Resulted in CEOs receiving a large proportion of
theircompensation in the form of stocks and shares.
By the year 2000, CEO salaries had jumped to almost $2.2million
on average.
-
7/31/2019 salary paid to the CEOs- is it justified?
6/16
Top CEO Salaries
-
7/31/2019 salary paid to the CEOs- is it justified?
7/16
CEOs are overpaid
The global survey conducted by Experian
in May and June 2012 as part of theGrant Thornton International
BusinessReport
-
7/31/2019 salary paid to the CEOs- is it justified?
8/16
78% of Indian business leaders believe seniorexecutives are paid
too much.
89% -executive remuneration at publiccompanies should be closely
linked toperformance targets.
70% -the shareholders should have greaterinvolvement in
establishing remuneration
policy for senior executives at large publiccompanies.
71% -public companies should disclose theremuneration policy and
individual remuneration ofexecutive and non-executive
directors.
-
7/31/2019 salary paid to the CEOs- is it justified?
9/16
Example: Fred Goodwin
Fred Goodwin, Former Chief Executive ofRoyal Bank ofScotland
Group
-
7/31/2019 salary paid to the CEOs- is it justified?
10/16
One
Widening gap between executive and average
employees compensation
Two
The relation between executive and averageemployees
compensation
Impact of high salary
-
7/31/2019 salary paid to the CEOs- is it justified?
11/16
Is it Justified?
"Pay for performance"
Businesses becoming more complex, CEOscommanding greater
pay.
CEO's pay set by the compensation committee
-
7/31/2019 salary paid to the CEOs- is it justified?
12/16
Example :1
Allan Mulally, the new CEO of Ford, was featured onthe cover
newspapers as having made $34 million in
the first 4 months on the job.
-
7/31/2019 salary paid to the CEOs- is it justified?
13/16
Example :2
E. Gordon Gee, Vanderbilt University making in excess of $1
million
Donald E Ross, President of Lynn University inFlorida, annual
pay package:- $5,042,315
-
7/31/2019 salary paid to the CEOs- is it justified?
14/16
In the end, thesalary is
appropriate
becausepeople are
willing to payit.
It is gettingtougher andtougher to
find talentedand qualifiedexecutives.
It would beunfair to expectgrowth in theindustries and
companies whilemaintaining
lower salariesfor those
responsible.
Wh CEO S l i A Sk
-
7/31/2019 salary paid to the CEOs- is it justified?
15/16
Why CEO Salaries Are Sky
High?
Create jobs.
Executives do a lot of things with a lot of
pressure on them.
Provide an incentive for innovation and risk-taking.
Attract, retain and motivate talented leaders
-
7/31/2019 salary paid to the CEOs- is it justified?
16/16
Conclusion
Return some equity to compensation of uppermanagement and the
individual contributors
Trust and respect salvaged Else, workers motivation, and
resultant innovation, will
plummet.
