Are Company CEO's Paid Too Much?

             CEO pay, even among companies whose market share and sales have slipped, is grossly unfair. "How bad are things? Here's one wise man's assessment: "About half of American industry has grossly unfair compensation systems where the top executives are paid too much," says Charlie Munger, Warren Buffett's partner at Berkshire Hathaway" (Kirkland 2006 78). The problem, as many critics see it, is the tremendous gulf between what CEOs earn and what the average worker takes home. "At 200 of America's largest companies, CEOs made an average of $11.5 million last year. A worker earning just under $40,000 annually would need 300 years to make that much... Overall, average CEO pay is now more than 100 times what the average worker makes. In 1980, it was 33 times average worker pay" (Anon 2006 1). Various other studies have confirmed this disparity: "In 2005, an average CEO was paid 821 times as much as a minimum wage earner who earns just $5.15 per hour. An average CEO earns more before lunchtime on the first day of work in the year than a minimum wage worker earns all year, according to the Economic Policy Institute" (Anon 2006 1). The enormous difference in pay between top management and the average worker is really nothing new. "When stock prices were stagnant in the 1970s and early ' 80s, CEOs were assailed as time-serving bureaucrats who were paid richly no matter how poorly stock prices performed. By the 1990s, CEOs were loaded with stock and options to give them skin in the game and make them act like owners" (Sloan 2006 1). The basic question: Are most CEOs worth it? Is something for shareholders to answer.
             When it comes to deciding on location for manufacturing plants in the U.S., as important as economic factors are as well as convenience to transportation, studies indicate other priorities: "The studies found several attributes of a state's economy to be associated with the state's ability to attract new manufacturing investment. T...

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Are Company CEO's Paid Too Much?. (1969, December 31). In MegaEssays.com. Retrieved 20:22, September 20, 2024, from https://www.megaessays.com/viewpaper/202373.html