Premium Essay

Are Ceos Overpaid?

In: Business and Management

Submitted By danielau
Words 828
Pages 4
CEO Compensation: A Display of Obscenity

For years, the great debate over whether or not CEOs are overpaid has raged on. Some studies show that the average CEO in the US was paid $10 million to $15 million 2005[1]. Proponents argue that this level of compensation (compensation is the total amount of remuneration received by an employee, including salary, stock options, etc.) is necessary to obtain and retain the world’s greatest leaders, whole opponents argue the exorbitant amounts aren’t justified. However, in a world where economies are hurting, it’s hard to justify why CEO compensation is rising, and fast. While CEOs are hard-working, intelligent leaders who’ve worked up to their position, the rising levels of CEO compensation are unreasonable and almost unethical given the current state of the world economy. To put it simply, CEOs are accountable for the performance of their company, but in the end they are still managers. It is important that as a society, CEO compensation is better controlled and more reasonably determined.

The high CEO compensation that exists today outlines the disparity of income between CEOs and their workers. CEOs pulling in millions while their workers struggle to get by is increasingly becoming an issue. A CEO working for a Fortune 50 company makes 213 times the average worker[2]. For instance, the CEO of Walmart pulls in $16,270,000 while the median worker makes just $22,700[3]. One of the worst CEO-to-worker pay ratios is found at UnitedHealth Group, where the CEO makes $101,965,000 whereas the median worker pay is $58,700; a CEO-to-worker ratio of a whopping 1737:1[4]. In these instances, it is clearly irresponsible of the CEO to be taking gluttonous salaries while underpaying the most important group people in the corporate chain, the lesser workers. In Walmart’s case, the average worker makes even less than the median…...

Similar Documents

Premium Essay

Are Athletes Overpaid

...Are Professional Athletes Overpaid? Have you ever considered how much money does an average person need to be able to have food three times a day, have a house, be able to send their children to school to get an education and even have a car? Realistically, all of this plus a little more can be done with an income of between $45,000 and $55,000 easily. For some reason, it was decided by us, people who labor is harder than the most, like janitors, factory workers, and even factory workers, should be paid less than someone that sits on a desk all day or someone that gets paid to play a game for living. Athletes today are the highest paid people in the world, with the exclusion of Donald Trump and Bill Gates. If you think about it, it is absurd to believe that someone is really worth millions of dollars and all they do is play a sport. Millions of people would do this for free if they had the chance. For that reason, I believe professional athletes are overpaid for many reasons. In USA Today Magazine, under section Your Life it says, “Although many professional athletes apparently still feel underpaid, just two percent of the public agrees, according to a survey conducted by Roper Starch Worldwide. In fact, the vast majority of Americans think athletes are overpaid.”(USA Today) This is ridiculous to hear for these athletes already making millions of dollars which is way more than they deserve. Also, in this article it states that professional athletes get paid......

Words: 2100 - Pages: 9

Free Essay

Overpaid Atheletes

...Today, professional athletes are one of the most overpaid careers in the country. Baseball players make more than a teacher, and football players earn more than a doctor. These everyday jobs teach students and save people’s lives. However, they do not earn as much money as an athlete, who gets paid for playing a game. These professional athletes cause an unbalanced power in society. Today, professional athletes get a high salary for just playing a game. Baseball players in the Major League Baseball earn an average pay of $1.37 million per year. The average salary for a basketball player in the National Basketball Association is $2.2 million every year. However, a teacher only makes $38,000 annually. A doctor, who saves lives everyday, earns about $130,000 a year. These athletes are mainly for entertainment, but earn more than these important careers. Hockey players, in the National Hockey League earn a paycheck of about $892,000 each year. A National Football league player can earn about $795,000 every year. In the United States, a fireman averages about $40,000 annually; this is not even close to the amount a football player makes. Police officers average a paycheck of about $29,000, this seems very small when comparing it to the high paying salary of these professional athletes. Professional athletes earning this much money is negative because they are basically playing a game, which many people play everyday for free, however they get paid thousands and......

Words: 787 - Pages: 4

Premium Essay

Ceo Compensation

...The Debate over CEO Compensation Analyzing Managerial Decisions: The Debate over CEO Compensation 1. Do you think the fact that most American CEOs are paid so much more than rank-and-file employees suggests CEOs are overpaid? Explain. I do not believe that just because American CEOs are paid much more than rank-and-file employees suggest that they are overpaid. Many CEOs whose salaries and compensation packages are discussed in the news are the CEOs from the largest American corporations and likely do not represent the average American CEO. Also, many times when CEO payouts are discussed in the news it is not a one year payout but instead a multi-year payout. Plus, many companies need to pay high salaries and incentives to attract successful CEOs from other companies. This alone drives the overall salary and compensation packages for CEOs but does not necessary point to them being overpaid. 2. Japanese CEOs generally receive much lower levels of compensation than CEOs in the United States. Does this imply that U.S. CEOs are overpaid? I do not believe that just because Japanese CEOs receive much lower salaries than United States CEOs implies that they are overpaid. I worked for Honda and one item that I learned in the past years is that there are large differences between the American and Japanese cultures. The Japanese very much frown upon employees that leave their companies. Japanese employees barely ever transfer companies unlike American...

Words: 944 - Pages: 4

Premium Essay

Are Ceos Overpaid

...Are Over the past 15 to 20 years more and more CEOs have been scrutinized and the typical CEO's pay is largely driven by market factors. CEOs pay is strongly related to stock performance. Because of more bureaucracy, the CEO's job has become increasingly more difficult over the past decade. In fact some would even argue that they are not paid enough and should be paid more. CEOs are being scrutinized more than ever. Some have taken on a celebrity persona such as Steve Jobs, Bill Gates, and Jack Welch. The fact of the matter is their pay is driven by market forces. You don't really hear of athletes being scrutinized like CEOs. However, since the collapse of companies such as Enron, WorldCom, and Tyco, their exposure has put them in the forefront of our society. CEOs are not unique. Other industries with similar backgrounds have earned just as well in the last decade. This includes top lawyers, athletes and top financial executives. Kaplan contends that it would be difficult to understand how pay increase could be driven by non-market forces when pay to athletes, lawyers and other groups have increased just as much. Their pay is strongly related to stock performance. Kaplan's recent analysis of CEO pays in a given year found that CEOs in the top 20% of actual pay generate stock returns 60% greater. This is greater than other firms in their industries over the past three years. In addition, CEOs from firms in the bottom 20% of actual pay......

Words: 1987 - Pages: 8

Premium Essay

Ceo Interview

...Chief Executive Officer in TESI Company Setting vision, principles and values in one company is the main task for one CEO. Questions such as: Which markets will the company join? What products? Where the company will be in 5 years’ time? How the company gets there? ... Have to be decided by him. The CEO chosen will ensure the development and the implementation of a strategic plan for the Company TESI to maximize shareholder’s profits, he will recommend it to the Board for review and, in the Board’s discretion, approval. He will report to the Board in a timely manner on deviations from the strategic plan or any parameters established by the Board. The CEO’s second duty is building culture of ethical conduct and integrity. Work gets done through people, and people are affected by culture. Culture is built in dozens of ways, and his every action sends cultural messages. He will need to set the ethical tone for the Company TESI and its Management, including activities such as but not limited to: overseeing the administration and implementation of, and compliance with, Company policies and procedures; and taking all reasonable steps to satisfy the Board as to the integrity of the CEO and other senior officers create a culture of integrity throughout the organization. Team-building is the CEO’s third duty. The CEO will develop a strong organization with the right people in the right positions. He will be able to hire/ fire non-performers and he will lead the senior management team....

Words: 856 - Pages: 4

Premium Essay

Overpaid Baseball Players

...expenditures, staggering media contracts, and a host of other phenomena are used as a means of retaining competitive advantage among teams, among corporations, and among media and advertising players. People who believe that athletes are paid fairly look at the realities of professional sports and that rarity of talent that comes with it.  It is easy to watch ten baseball players slug it out and proclaim them as overpaid professional athletes, but these ten players are probably the ten best baseball players in the world, and they are paid because they are the best at what they do.  If the young engineer somehow becomes one of the ten best engineers in the world, will he be rich too?  The MLB consists of hundreds of professionals from all over the world.  If we pool these athletes of the best doctors in the world in a fantasy surgeon’s league, will people think that they are overpaid too?  This suggests that as long as you are the best in any field, you are most likely getting millions for your work. At the end of the day, the question "are professional athletes overpaid?" depends on how we value these players.  The raging debate transcends economic and moral issues.  At the same time, people prefer to take the fact lightly and just enjoy the sport.  Is it a question of fairness, or a question of just reward for a rare skill?  Is the skill of a professional athlete rare enough to be compensated as such?  Let us leave these questions to our personal views....

Words: 547 - Pages: 3

Free Essay

Succession of a Ceo

...Succession of a CEO: How Will ITT Educational Services Incorporated Succeed With Changing Their CEO? April Peck Daniel Webster College October 27, 2014 Executive Summary ITT Education Services, Inc. has been under a vast amount of scrutiny in the past year, not only from the media, but the government as well. How does a company like ITT Educational Services, Inc. overcome this scrutiny? With enacting a new CEO, what will that new CEO need to do in order to change the corporate culture and their strategy? Research that was conducted will show that there are other companies who have found themselves in a similar situation as ITT Educational Inc., as well as what they have begun to do in order to be successful in getting through these issues, while increasing how potential customers felt about the company. Along with this information, research was conducted to show what steps ITT Educational Inc. has already done in order to change their processes to become a more student focused company. In conclusion you will see that the research shows that while ITT Educational Inc. is in dire straits those steps that they have taken will assist with getting the company out of the hole they find themselves in now. Also, it will show that a new CEO can come into this company and with the right structure and strategy can take this company from where they are now to a company that has the ability to feel the same success they felt in early 2000, a while following the government......

Words: 2201 - Pages: 9

Premium Essay

Ceo Compensation

...Shareholders Watchdog, Inc. 777 Wall Street New York, NY 10005 December 7, 2011 RE: Is CEO Compensation Fair? Dear employee, Accompanying this letter is our completed report that discusses the issue of the fairness of current CEO compensation. Although there are two sides of this argument, recent legislation and regulations for reform tend to support those who believe it is unfair. We have evaluated the current standards of CEO compensation and examined why both sides think they should prevail. There are some advantages that strongly support CEO’s huge salaries, including the following: * Provides incentives and motivates the CEO to obtain or surpass corporate objectives * Retains key-value leaders for the long-term, resulting in consistent corporate success * Creates a strong CEO confidence for him/her to reinvest in the corporation (bonds) Our overall research indicates that CEO compensation does not reflect actual performance in most cases. Many CEO’s are grossly over compensated (including stock options, bonuses, hedge funds, and other benefits). The “Golden Parachute” guarantee adds insult to injury. Based on our research, conducted from the UNLV Library periodicals database and online sources, we recommend the following: * Require corporations to adhere to sections 951, 953, 955 and 956 of the Dodd-Frank Bill * Maintain a collective (“Esprit de corps”) work force environment for all employees * Consult third party......

Words: 10991 - Pages: 44

Free Essay

Overpaid Baseball Players

...Overpaid Baseball Players When addressing the value of entertainment, there is without a doubt, that we as a society value entertainment highly. But there is no reason that these athletes, who are here to merely entertain us, get paid higher wages than those that save our lives and teach us such as medical doctors and teachers. Professional athletes do not offer society an essential function that improves or enhances our world in comparison to other professionals. It is my claim that professional baseball players are paid more than they are worth. Economics is the key to understanding why these athletes earn such tremendous salaries; still, it fails to explain why they actually do deserve it. Giving athlete’s high wages doesn’t only distort them, but also bring downfall to clubs and the country’s economy. The growth and the development of a sport may be reflected from the wages of the athletes and that is all it does. In conclusion, Team owners pay more to keep athletes on the team to be on a winning streak, but whether the drive to win is justifiable remains in doubt. The economic system involving sports, corporate America, and the media is an interdependent one. Athletes make huge sums of money paid to them by owners who make even larger sums of money. Agents, free agency, and other phenomena keep athlete salaries rising. So, too, does increased ticket sales to games, increased TV viewership, enormous media contracts, TV advertising, and corporate sponsorship and......

Words: 436 - Pages: 2

Premium Essay

Case Study the Overpaid Bank Teller

...The Overpaid Bank Teller Human Resource Management 1. If you were on the bank’s HR Committee, what would you do regarding raises for the tellers? I think first of all the State Bank should not base their wages off of a wage survey conducted by a competitor. Utilizing a third party to conduct a wage survey before making such a decision would be a much better option. I also think that lowering the raises that the teller will receive, as they have not been told how much their raises would be. Therefore reducing raises does not seem like it would have an impact on the employee satisfaction or their productivity. 2. How much faith should the HR Committee place in the accuracy of the wage survey? “Obtaining a wage or salary survey requires a small or large business to hire an outside company to compile the data or collect the information using individual employees and businesses from across the particular industry. This data is necessary for a business to create competitive salary packages and to comply with state and federal regulations regarding prevailing wages”. Lister., J There are some things that I think should be considered in regards to a wage survey. What other information is missing? Do the other banks have Spanish speaking individuals? Are the tellers the only ones that speak Spanish or are the loan officers also bilingual? People that are bilingual are often paid more than their counter parts that only speak one language. It is also......

Words: 643 - Pages: 3

Free Essay

Cv of Ceo

...rapid-change environments will help employers to understand my strength. Proven achievements in software engineering, search engines or browsers and relevant business background are also my strong points. Core competencies: Browser specialist, Strategic planning, software management, leadership, SEO expert. Professional Experience: Company Name Designation Microsoft Director, Software Development Department Apple General Manager, Safari* Opera mini Chief Executive Officer (CEO)* Duration 2001-2003 2004-2009 2010-present *Award Publications: Research paper: 1. Preliminary guidelines for empirical research in software engineering; IEEE; ISSN0098-5589, Aug 2002. 2. Future paths for integer programming and links to artificial intelligence; Elsevier; ISSN0087-7656, Dec 2005.* Books: 3. Multimedia browser for internet; ISBN-2980-0989; Jun 2009 4. Internet Economy; ISBN-2345-7865, March 2013* Awards and Achievement: 1. Successful General Manager of The Year, 2008 from Apple Inc for outstanding growth of ‘Safari’. 2. Best CEO of Opera Mini, 2014 for excellent development of its different units. 3. New York Times bestseller Award for the ‘Internet Economy’. Education: 1. BS, Computer Science and Information Systems, California State University, 1992. 2. MS, Industrial management, Colorado State University, ASHRAE full bright Engineering Scholarship, 1994. 3. MBA, Business Development and Management, Pennsylvania State University, 1996. 4. Professional Course on Computer Language,......

Words: 332 - Pages: 2

Free Essay

Ceo Compensation

...I think that people consider CEO compensation to be unfair because they simply see a large compensation. However, when determining if CEO compensation is fair I think there is more to be considered. People unaffiliated with the company are not going to have an unbiased opinion. Therefore, we need to look to those affiliated with the company of interest. Research shows that 93% of companies in the Russell 3000 index approved of their CEO's pay. (Feloni 2014) Also, we should consider that only 20% of CEO compensation is base pay, the rest is based on the performance of the company. Therefore, the majority of their compensation is contingent on working hard to see their company succeed. A paper by Kaplan and Joshua Rauh of Stanford found that the highest paid CEO’s also generated higher stock returns. “The highest-paid CEOs in terms of realized pay—the top 20% out of 1,700 firms—generated three-year stock returns that were 60% higher than those of other firms in their industries.” (Sumo and Weitzman 2013) It should also be noted that the increase of current CEO’s compensation packages are reflecting US stock highs. Finally, CEO’s are appointed. They have to climb the corporate ladder and have adequate qualifications. Therefore, it is not accurate or fair to compare their compensation to an average worker’s compensation. If you compare a CEO’s pay with other high –earning professionals their pay is reasonable. Steven Neil Kaplan, Neubauer Family Distinguished......

Words: 368 - Pages: 2

Premium Essay

Case: the Overpaid Bank Tellers

...CASE The Overpaid Bank Tellers State Bank is located in a southwestern town of about 50,000 people. It is one of four banks in the area and has the reputation of being the most progressive. Russell Duncan has been the president of the bank for 15 years. Before coming to State Bank, Duncan worked for a large Detroit bank for 10 years. Duncan has implemented a number of changes that have earned him a great deal of respect and admiration from both bank employees and townspeople alike. For example, in response to a growing number of Spanish-speaking people in the area, he hired Latinos and placed them in critical bank positions. He organized and staffed the city's only agricultural loan center to meet the needs of the area's farmers. In addition, he established the state's first "uniline" system for handling customers waiting in line for a teller. Perhaps more than anything else, Duncan is known for establishing progressive human resource practices. He strongly believes that the bank's employees are its most important asset and continually searches for ways to increase both employee satisfaction and productivity. He feels that all employees should strive to continually improve their skills and abilities and, hence, he cross-trains employees and sends many of them to courses and conferences sponsored by banking groups such as the American Institute of Banking. With regard to employee compensation, Duncan firmly believes that employees should be paid according......

Words: 720 - Pages: 3

Premium Essay

Managers in the Us Are Overpaid

...and therefore, companies need to give significant sums of money to whoever can do the adequate job of management. CEOs today are paid around ten times more than their predecessors of the 1960's, even though the managers back then actually ran successful companies, whereas today, companies struggle too much in today's market. Also, managers in the United States are not only over-priced but over-protected. In a sense that they do not get punished for poor performance. Pretty much the manager class in the country have become such a high political, economic and ideological source of power, which it has been able to manipulate the forces that determine the national wage for managers. It does not matter the economy of a country how much money they get, countries where the national wage is lower or even higher than the United States, still managers earn much more than managers of other nations. Finally, the job of a manager is HIGHLY competitive in the US and those who get to be CEOs of big corporations tend to be very skilled, prepared and pro-active in that job. Being in one of the largest countries in the world, the task of a CEO is not easy, and there's an enormous responsibility behind it. Analysis The thing about this topic is that free-market economists argue that there be no problem in the crazy amount of money CEOs get. The economists say "The payment of the CEOs is ten times more than the average worker, they say, it must be because they add 300 times more value to the......

Words: 589 - Pages: 3

Premium Essay

Ceo Compensation

...| CEO Compensation | | | | Jade Duan | 5/12/2012 | | INTRODUCTION Over the past a few decades, executive pay has risen dramatically in the United States. As of 1960, the average CEO at a large corporation made approximately $190,000 (equivalent to approximately $1.3 million today). The 1990s saw one of the greatest wealth transfers in history, as CEO pay skyrocketed. S&P companies CEO pay went from 1993 average of $3.7 to $17.4 million in 2000 [1]. In 2010 the highest paid CEO was Viacom's Philippe P. Dauman at $84.5 million in 9 months [2]. Motorola CEO, Sanjay Jha, pay package rose to $47 million in 2011, almost four times of his 2010 pay about $13 million [3]. As CEO compensation continues to soar while workers’ pay stalls, today, the average CEO makes 411 times more than the average worker (Figure 1). The explosion in executive pay has become controversial and criticized. The idea that stock options and other alleged pay-for-performance are driven by economics has also been questioned. Figure 1. Ratio of average CEO Pay to average production worker compensation in America Observers differ as to whether this rise is a natural and beneficial result of competition for scarce business talent that can add greatly to stockholder value in large companies, or a socially harmful phenomenon brought about by social and political changes that have given executives greater control over their own pay. "Today the idea that huge paychecks are part of a......

Words: 5460 - Pages: 22