Are CEOS Paid Too Much Essay

This essay has a total of 2712 words and 11 pages.


Are CEOS Paid Too Much




Table of Contents
Outline……………………………………………………………………………………………………..3
Top Executives Deserve the Money they Make…………………………………………………………4
Introduction……………………………………………………………………………………………….4
High Pay Seems Small When Compared To Company Profits………………………………………..4
Top Executives Are Under a Lot of Pressure……………………………………………………………5
Pay Should Reflect Performance………………………………………………………………………...6
Conclusions and Recommendations……………………………………………………………………..7
Bibliography………………………………………………………………………………………………8













OUTLINE
This report explores the issue of the pay that top executives make, and the reasons why
they do. It also suggests improvements that can be made to make the system better. High
Pay Seems Small When Compared To Company Profits Many companies pull in profits that are
extremely high. When an employee of such a companies salary is compared to the amount of
profit that the company earns, it starts to seem reasonable. It only makes sense that if
the employee is directly responsible for the success of their company, then they deserve
to get their payback. It seems ironic, but many salaries even look small once compared
with a companies profits. Top Executives Are Under A Lot Of Pressure Being the CEO of a
company is not an easy job. There is all kinds of pressure for a person in such a position
to succeed. If they do not, then it is their job on the line. Therefore, they deserve to
receive a large sum of money for the work that they do. It is the only way to compensate
these employees for the tremendous strain that their job puts on them. It is essential
that the employees get paid the amount of money that they deserve. Pay Should Reflect
Performance When CEOs are being given big paychecks, they are expected to perform at a
high level. There success is impeccable. However, this does not always happen. There
should be some way of connecting pay to job performance. The best way of doing this would
be to award bonuses to those workers who are at the top of their class. This would not
only motivate workers to do a good job, but also reward the employees that do succeed.












TOP EXECUTIVES DESERVE THE MONEY THAT THEY MAKE
INTRODUCTION
It is a well-known fact that many people holding high positions in companies make an
exorbitant amount of money. Some, however, say that they do not deserve the amount that
they are paid. They feel that for the amount of work that is done by these executives,
their paycheck is simply too high. Also, they believe that these high paid workers often
do a mediocre job, while still managing to reap the benefits of being an executive. While
these are viable arguments against this issue, the other side of the spectrum shows that
this is not so. There is an equal amount of evidence, if not more, that suggests that
executives earn every penny of their paychecks. The CEOs of companies are under an
extraordinary amount of pressure. They face the task of making sure that a company pulls
in a profit, or possibly losing their job. There are few, if any other positions that put
an employee in this situation. Important decisions are made by them everyday, many of
which decide whether a company will prosper, or go under. Many of these men had to work
their way to the top. They usually have extensive business backgrounds, and know their
field well. There are very few people qualified, or knowledgeable enough to perform well
in executive positions. That makes the ones that are, a hot commodity. Thus allowing them
to demand the high pay that they earn.

High Pay Seems Small When Compared To Company Profits
When the public sees a salary that they consider to be too big; they are usually looking
at only half of the picture. It is impossible to look at just the salary, without taking
any other factors into consideration. One must look at the amount of earnings, compared to
the profits of the company. For instance, Robert Allen, who runs ATT, was recently pointed
out by 60 Minutes as being an overpaid executive. Their major problem was that he had been
responsible for laying off 40,000 employees, while still managing to give himself a large
pay increase. At first glance, this situation may appear to be one involving a greedy and
overpaid executive. However, upon closer examination, it proves to be much to the
contrary. The situation wherein the 40,000 employees were laid off was not a matter of
getting rid of people for an unfounded reason. It was more a matter of getting rid of an
excessively large work force, and getting the same job done with fewer people. This not
only benefited ATT, but also, the customers receiving service from ATT. "For exactly the
same service in 1996, the average family will be paying $11 less." This is due to the
fact that the consumer's money was not going to a larger number of employees, but going
directly to the minimal cost of performing the job. Robert Allen has a total salary of 20
million dollars. This salary seems to be extremely high when put as a statistic by itself.
This changes, though, when you compare it to the total earning of ATT. His salary
calculates to be 1/3,450 of ATT's gross. All of the sudden, the 20 million dollars does
not seem like such a high figure after all. Another factor that serves to make his salary
a valid amount, is that even if his total pay was split between all of the laid off
workers, they would only receive about $500, not much more than a weeks pay. When all of
the cards are on the table, a salary of 20 million dollar starts to look quite reasonable.

Top Executives Are Under A Lot Of Pressure
Most jobs are clear-cut. A person has a designated task to perform, and the method of
performing this task is clearly laid out. If all directions are followed, then there is
not too much that can go wrong. This, unfortunately, is not the situation for top
executives in companies. They are in the tough position of making decisions that may
affect the whole company. With one bad move, they can bring a multi-million dollar
business under. On the same level, though, that can bring in an infinite amount of profit
by making a good move. All executives realize this, and this puts an superfluous amount of
pressure on them. Most people could not handle this on a day in, day out basis. It would
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