Are American Corporate Ceo’s Overpaid_ Essay
I believe that CEO’s are paid to much because it does not seem to matter just how well the company does while they are running it they still seem to make a ridiculous amount of money. This is wrong because they are supposed to be paid according to how well that the company does but even when it does poorly they are still paid exceedingly well. While this is not a surprise on top of being paid exceedingly well they are also given stock options which essentially increase there earnings even more. It used to be that the lowest paid employee in the company earned one tenth of the CEO. Now CEOs expect to earn at least 100 times as much as the lowest employee. The average pay of company CEO’s was almost 13 million in 2011. CEOs do not produce anything and, if their value were compensated by how well the company did under their leadership, they often would get pay cuts. If every company looks through their top leadership, pay difference is ridiculous.
It is the way it is because corporate America rules the country. If you have political connections and/or client connection and you can bring tons of new business then you can be CEO any day. Now if you start your own business – you can be CEO from day one (don’t require a special talent) just common business sense. Base salaries of corporate CEO’s should be on par with federal job grades just like for other employees. If they bring in all this money solely because of there new million dollar business and make profit out of it. They get a fix cut of it for that year. Paying CEO’s 100x, 300x, 500x more money then the rest is basically saying rest of the employees are suckers, looser and bottom feeders. Its a shame. CEO’s have become merely managers, or caretakers of their shareholders’ property. Yet they, inexplicably, are compensated as if they were visionaries. This is wrong. This is what the Occupy Wall Street crowd should be railing against.
Though, I can’t honestly say I have the skills needed to run a multi-million dollar organization as a CEO, let alone a major corporation like Apple, Oracle or Kraft Foods—but that doesn’t mean I believe that the collective group running America’s biggest companies are worth a $10.5 million pay raise as many organizations scratch and crawl their way out of the worst economic crisis since the Great Depression. The spectacular collapse of banks whose executives were allegedly paid for performance clearly raises many questions about the link between executive pay and risk-taking. In 1980, bankers made no more than their counterparts in other parts of the economy, by 2000 wages in the financial sector were 40% higher for employees with the same formal qualifications The last time such a discrepancy was observed was just prior to the Great Depression—an irony which has not been lost on critics of bank compensation, ranging from regulators to the Occupy Wall Street protesters.
But the level of compensation alone may not be the real problem. Many leading economists have emphasized that a much more important question to answer is how the structure of performance pay may encourage excessive risk-taking at all levels of the institution, from traders and underwriters right up to the firm’s CEO. By locking pay into contracts worth millions of dollars,CEO’s can then preside over a company’s risk-taking and inevitable bankruptcy while still getting paid. CEO’s can make a billion dollars a year, but they cant have a golden parachute clause or any kind of obligatory “bonus”. CEO’s supposedly deserve all this money for increasing shareholder value. But, executives are payed on stock performance which pushes them away from the real market—where customers are the focus and a leader’s job is to find better ways to serve them—to the expectations market, where the leader’s job is to manipulate Wall Street’s expectations about the company.
The only way an executive can raise the stock price is to make expectations rise from their current level. Eventually some executives decided, “We can do some sharp accounting, so it looks like we’re growing faster than we are, and we’ll do acquisitions that make it look like we’re growing like stink.” This new way of thinking has led to fraud and all kinds of scandals. Also, because expectations cannot rise forever, the CEO’s reaction to stock-based pay is to build expectations to a short-term peak, and then get the hell out before the company falls apart. This leads to job loss and economic hardships for the daily worker while the CEO makes millions of dollars.
In Conclusion, CEO’s are vastly overpaid. They make significantly more then the average employee for there company but, there getting payed big because of how expectations and the stock market work. CEO’s are inclined to push companies to get massive short term profits and then get out before the company fails. Meanwhile, they get paid large sums in bonuses and awards. Taking risk heavy actions and doing scandalous acts are not what the highest payed people in our country should be doing. That money would be better off going to someone or someones who have done a good job and contributed the most to the economy and society as a whole.