Ceo Compensation Essay example
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 …show more content…
There are reasons that the overpayment of the CEO might be in the shareholders’ best interest. Since there is only one CEO position for each company many employees will fight to get the position. Therefore, the reward for getting to that position and becoming the final person standing must be extremely attractive. The larger the company the nicer the prize needs to be at the end of the fight. Therefore, it could be in the best interest of the shareholders’ interest to overpay the CEO as it will assist them in getting the best CEO.