The Pros And Cons Of CEO Compensations

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CEO compensations are awards and incentives given to the chief executive officers of companies. These awards could either be in the form of cash or in non-monetary forms. For instance, some executives are awarded huge numbers of shares in a company or are allowed to purchase the shares on their own but at subsidized prices. The sum of reimbursement on compensation to any chief executive officer is decided on by the board of directors to that particular company (Sam Ashe-Edmunds, 2014). The last few decades have seen dramatic and outrageous rises in executive compensations. Currently, the amount of money paid to CEOs as compensation is close to two hundred times the amount CEOS were receiving in the 70s (WAGNER, 2012).
Merits of some proposed …show more content…

This act prohibits bankers from sitting on their customers’ board of directors. Revision of this act would allow bankers to sit in such boards. The bankers would then be required to oversee the activities of the board. By so doing, the customers’ interests would be adequately represented. The bankers would also help regulate the amounts of compensation given to the executive. Similarly, another recommendation is the adoption of the German style of code termination. Adoption of this code would mean that workers of the company would elect representatives to sit on the boards of directors. These representatives would act as watch dogs to ensure fairness, equity and harmony of salaries (LEADER, …show more content…

However, majority of scholars argue that the problem of excessive compensation should never be addressed via legislation. It is argued that involving the legislature would end up creating more problems than solutions (WAGNER, 2012). This is largely because it is never easy to set a standard guideline as to how much a CEO should receive. Companies that are doing fairly well prefer to pay their CEOs highly. Likewise, with the increasing technological advancements and innovations, companies seem to be performing much better than the previous years. Improvement in performance translates into increased CEO salaries and compensations. All in all, internal regulatory bodies should be created to ensure that these compensations are not too extreme (WAGNER,

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