Are U.S. CEOs overpaid Research Paper Example | Topics and Well Written Essays - 2000 words

Are U.S. CEOs overpaid - Research Paper Example Even if they did not occupy such positions, people with a firm educational background and effective leadership skills should be paid much more than the rest of the population. The public’s outcry is not entirely misguided; nonetheless, there are facts supporting the high earnings entitled to the CEOs and it remains unclear whether capping CEO salaries will contribute to business success. This paper explores whether US CEOs are overpaid. Statistics According to Kaplan, US CEOs are arguably overpaid (6). According to Walsh, some of the potential triggers of the ‘excessive’ salaries of CEOs include; too much influence, negligent boards of directors, weak compensation consultants, and formulation of salary scales through stock options among others (73). According to Kay and Van Putten, in 1970, the average Chief Executive Officer earned about $700,000 (189). The amount was 25 times the earning of an average production employee. Three decades later, CEO salaries had ri sen to almost $2.2 million, 90 times more than the salary of an average worker (Kay, and Van Putten, 190). Kaplan argues that with an increase in the value of stocks and other allowance, the average CEO currently earns between 250-500 times the average employee’s salaries (7). ... Any employee in the technology industry is aware this average salary would hardly hire a well-educated administrative staff in technology-intensive sectors in the United States. According to Thomas and Hill, current CEOs serve shorter terms compared to CEOs of the late twentieth century, hence the sharp rise in the earnings (19). The high rise in CEO salaries may be attributed to the fact that the officers are uncertain about what would happen next. Capitalism seems to have entered the corporate sector to the level that CEO may see it better to earn as much as they can when in such positions (Kay, and Van Putten 191). According to Walsh, today’s CEOs are virtually carrying out the same duties as their predecessors who earned a much less, but this is not the case with line workers (75). Whereas, the salary gap between a top executive and the average employee calls for a review of the rules to narrow it, Kaplan argues that rectifying the discrepancy may not be achieved (6). Owin g to the fact that CEO salaries top the list of salary scales in most organizations, theirs tend to be fodder to the media. Less widely covered is the substantial salary disparity between employees and junior executive remunerations. It differs by sector, but in most firms, the salary discrepancy becomes clear at the immediate CEO subordinates. At this point the analysts move into a lower pay level, but significant disparities in salary still subsist between a senior executive and a CEO (Kay, and Van Putten 122-127). Relating the average worker pay to CEOs For easier understanding of the salary scale of the average employee in the US, it would be appropriate to analyze all aspects of their salary; wage, shift gap,