CEO Salaries

1052 Words5 Pages
The average compensation of Chief Executive Officer’s has risen to stratospheric heights in the recent years. In 1965, the ratio between CEO pay and the average company pay was 24 to 1. By 1980, the ratio had increased to 40 to 1. In 2000, the ratio skyrocketed to 300 to 1 and has bounced around considerably in the last decade. The public considers this to be disproportionate and inequitable executive compensation. There is a debate about whether CEO salaries are excessive or fair and market-based. The question raised is if CEOs are worth their inflated salaries and if not, are there alternatives to the constant escalation of executive compensation. Using Davis and Moore’s Principles of Stratification and Karl Marx, we will analyze cause and effects of increasing CEO salaries and it’s prominence as a current class and inequality topic.
The criticism of Chief Executive Officer salaries comes from a chorus of shareholders, the business media, policy makers, and academics. The criticisms focus on CEOs not only because they are the highest paid executives but also because their compensation sets the standard for those beneath them. Whether CEOs are paid too much is highly contested. Some shareholders, politicians, and the public believe that executives are overpaid, while other shareholders and board members disagree. What cannot be argued is that American CEOs make more money than CEOs in other countries - due mostly to greater reliance on incentive pay – and increasingly larger amounts than the average employee and their subordinates. Because of this, it is clear that the rise in executive salaries contributes to the skewing of income distribution in the United States and furthermore, income inequality.
Kingsley Davis and Wilber...

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...cutive salaries because while the CEO’s salary is increasing, the average workers salary is staying the same in turn creating large gaps in income inequality.
When looking at the inflation of executive compensation one can safely say that people are uneasy with the growing income gap caused by CEO salaries. Though Davis and Moore claim that these salaries are positively functional for society because it brings the qualified people into the highest positions, it can be argued that are a number of functionally necessary jobs that are being compensated much less. Karl Marx states that wages and salaries are created on the basis of human needs, but for CEOs to be making millions exceeds what humans need to survive. Examining this information, it is clear that the soaring salary of executives needs to be tamed before the issue of income inequality becomes irreversible.
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