Executive Salaries and What it Means to our Economy The economy of the United States is by far the largest and most powerful economy in the entire world. The average family income is roughly $40,000 a year and our GDP (Gross Domestic Product) is well over 10 trillion dollars. The next closest country is Japan with 4 trillion dollars of total GDP.(Johnson & Wales: Economics) The United States has so many large corporations it takes someone to run each one and it also take a lot of money to pay someone to be in charge of each one. Top companies in the United States range from automobile manufacturers to household appliance manufacturers to telecommunication companies. The largest company in the United States under the category of net income is Citigroup which is in the banking industry. The CEO of Citigroup is Charles O. Prince. In 2005 Charles O. Prince raked in $22,994,729 in total compensation including stock option grants from Citigroup. The average employee would have to work 459 years to equal Charles O. Prince's 2005 compensation.(AUM) Other benefits that CEOs harvest range from country club memberships to yacht expenses. Mattress King Simmons Bedding covers up to $105,000 in annual costs for the crew on CEO Charles Eitel's yacht. Eitel, who earned $998,000 in salary and bonus, makes the yacht available for corporate functions 30 days a year. (USA Today) The extra perks that CEOs acquire are mind-boggling for the average person to fathom. The ones to blame unfortunately are ourselves. Over the years there could have been investor involvement to stop this inflation of executive pay from happening. Sadl... ... middle of paper ... ...y as respect income. The recent explosion of big business and international expansion makes it necessary for a company to offer huge compensation to its CEO. It is not fair though for us to compare a person's compensation to our own. We do have not the slightest clue of the stress level of their job, nor the skill necessary to attain such a position. It sure seems nice though to be a CEO. Works Cited USA Today/Special report: CEO pay 'business as usual' http://www.usatoday.com/money/companies/management/2005-03-30-ceo-pay-2004-cover_x.htm USA Today/Special Report: Executive Pay 2004 http://www.usatoday.com/money/companies/management/2004-ceo-pay-total-chart.htm Americas Union Movement/2005 Trends in CEO Pay http://www.aflcio.org/corporatewatch/paywatch/pay/index.cfm
According to Charity Navigator (Are Nonprofit CEOs Overpaid?), certain industries pay more than others, specifically; an executive can earn more at an Educational charity rather than a Religious one. Geographical location typically reflects the variations in cost of living throughout the country. Naturally, charities with larger budgets can afford to provide higher compensation. The focus of an organization's mission can also have a significant impact on the amount of compensation available. The board of a nonprofit should have a documented policy for determining compensation and raises. While there are not very many charitable organization executives earning over $1 million dollars annually, it should still be of concern because such an amount is quite
Executive compensation has been studied for many years. While the average person probably does not think about it on a daily basis, it is necessary to watch trends. Tracking the amount of money they make as well as the bonuses, stock options, and other benefits shows how these executives are making such high rates of pay compared to the ordinary worker. Tracking how much an executive makes began in the 1930’s. Since this time not only has it been tracked but there have been many changes in the type of tracking, the tax laws and what is available as compensation. This paper highlights the changes that have occurred since the early 20th century until today and changes that still need to occur.
...ith strong share price and some of them will get the organisation with the worst conditions of company performance. This is when the corporate governance bringing the right direction for organisation making best practice in deciding executive remuneration to sufficiently attract and motivate, eventhough to reach the satisfactory result there is a long way to go, involves time and efforts. The executives' remuneration at WH Smith especially for CEO is considered appropriate because it does not rely on agency theory alone but also considered the guidelines of the UK Corporate Government Code (2010) which is to attract, retain and motivate directors. To support this argument, “high pay itself is not evidence of inefficient contracts but may simply reflect the market for CEOs and the pay necessary to attract, retain, and motivate talented individuals.” (Conyon, M. 2006)
They do not just get paid a salary or just simply receive shares of the company. These different methods should be discussed so the reader does not feel that the CEO only has these shares and truly lost that much money. The second critique could simply be fixed by clarifying that Woodman did not actually lose $3 billion but lost $ 3 billion in value. I feel that simply doing this would change the entire tone of the article. It would not seem as drastic or like a major issue if they simply specified it was just value that was lost. How I would fix the third critique is by talking about why CEOs get paid the way they do. By that I mean I would want to discuss the fact that CEOs value typically reflects the value of the company so if the company declines in value so should the CEOs
Reasons being their job in an organization or a corporation is very crucial and not easy to replace. Due to this, companies often go to great lengths spending hundreds of thousands of dollars searching and recruiting for someone who is able to help their company grow in value and continue to be successful. In order to attract the best and highly skilled employees, companies cannot just focus on their salary offers anymore. Competitive hiring practices are now focusing on various compensation and benefit packages that will make potential employees favor them to other competitive companies (“Executive Benefits and Compensation”, 2016). Companies must offer benefits that will have a positive effect on the organization without being counterproductive, meaning offering benefits that employees will use appropriately and will consequently have a positive impact on their effectiveness at work. Some concerns about executive compensation include making business decisions in order to meet business goals under the premise of personal gain in order to receive their incentive (“Executive Benefits and Compensation”, 2016). In order to combat this concern companies should tie the employee’s incentives to the value of their firm
The growing public criticisms of ultra-high executive pay are not unfounded. According to Mr. Meizhu Lui, “the ratio of CEO pay as a multiple of average worker pay has grown tremendously, from 41 to 1 in 1960 to 411 to 1...
The distribution of wealth by country is an amazing thing to look at (see table 3). The United States comes clearly on top with 41.6% of the wealth across the world, with the next closest being China at 10%. This shows that there is plenty of wealth to go around in the United States; we just don’t equally distribute it. The Gini Coefficient is the best way the world economy can represent the income distribution of a nation’s citizens. The United States ranks well below any other first world country (See table 2) This is an embarrassment to our country. We are a wealthy and successful country, yet we have a bigger gap between the wealthy and poor than any other country that compares to
The question is why. The reason is simple. It’s greed. The more a CEO makes the more they want to make. The economy is no longer about providing a good or service for the population at large, but about amassing as much wealth as possible, and you’re stupid if you think you have the same opportunities to obtain wealth as those Wal-mart and Target CEOs. The truth is the deck is stacked against you, and it keeps getting worse as the world moves along its orbit. The economy has become based largely on the trading and selling of commodities, and the worker has become a cheap disposable commodity, to be used up by megalomaniacs who sit atop cash mountains, casting down crumbs as they see fit.
Imagine being in a world where people are paid in cash bonuses, stock options, or generous severance pay when fired from their job due to a company merger, are asked to leave, or choose to retire. This happens to be a reality for many CEO’s and top executives of companies. We live in an economy where mergers and take over’s have become common, and to allow this option for the highest paid employees of a company is arguably unfair. While researching golden parachutes, I formed questions due to the circumstances surrounding this executive option. For example, why should CEO’s, who live very comfortably, be given a compensation package for losing their position due to a company merger or retirement when employee and shareholder’s futures are at stake? Is it fair for the rich to get richer when numerous employees below top executives are dealt the same fate from a merger and shareholders’ investments are at risk but neither receive a form of additional compensation? Of course, there’re those who support the issuance of golden parachutes, arguing they can persuade a possible company merger to not take place due to the costs associated with a top executives golden parachute package. Another supporting point for golden parachutes is, they can make it easier for higher up executives, like CEO’s be absorbed into the future merged company. I will be addressing the point of whether CEO’s and other executives deserve to be awarded a Golden Parachute option by their company. As well as a brief background of Golden Parachutes and my stance on them. They’re a very important part of our growing economy and will always be considered in a merger/takeover if awarded to executives.
However, many Chief Executive Officers in one day earn more than an average employee earns in one year. In the video is also described how executive pay critics complain about the pay of Chief Executives Officers when a company is not doing well.
CEO compensation has been a heated debate for many years recently, and it can be argued that they are either overpaid or that there payment is justified by the amount of work they do and their performance. To answer the question about whether CEO compensation is justified it must be looked at by the utilitarian viewpoint where the good of many outweighs the good of one. It is true that many CEO’s are paid an exorbitant amount of money; however, their payment is justified by the amount of money that they bring back to the company and the shareholders. There are many factors that impact the pay that the CEO receives according to Shah et.al CEO compensation relies on more than just the performance of the CEO, there are a number of factors that play a rule in the compensation of the CEO including the fellow people who help govern the corporation (Board of Directors, Audit Committee), the size of the company, and the performance that the CEO accomplishes (2009). In this paper the focus will be on the performace aspect of the CEO.
Economics in United States has drastically changed than early 1800’s. Government has taxed more than they ever have which led to many problems like people getting evicted because taxes were too high to pay and many people were ending up being homeless. From 2000 through 2006 American people in poverty has increased 15% .One-quarter of American workers make less than $10 per hour with a annual income less than $20,614. While the average American are struggling to provide for their family while the rich people are getting richer. Big corporate and well known companies profit increased 13 percent per year and the CEO are making about $7.08 million, 356 time than it’s average employee pay which is about $19,906 according to a article “ Income
Developed countries such as the U.S. are generally considered to be the most industrial, meaning that the countries system(s) are based off of industries, which in turn establishes a higher income level that a person earns since the country’s economy relies on the production and distribution of goods. This type of establishment is seen as a capitalism, which could be one of the many major reasons to why the gap between the rich and the poor continue to grow. Big corporations such as Apple, Nike, Adidas, Target, CVS Caremark, and
The United States of America is considered the largest and most powerful economy in the world with the highest industries being technology innovator, motor vehicles, and telecommunications, (CIA, 2014). The GDP of the United States sits at $16.72 trillion, which is a 1 percent increase from 2012. The unemployment rate for 2013 is 7.3 percent, and the poverty line is 15.1 percent, (CIA, 2014).
Board membership carries responsibilities that involve a lot of risks, and no body will be motivated to set on the board unless there are some justifiable lucrative rewards for being on the board. So directors, whether executive or non executive must be remunerated however the vital question will be how?