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Do CEOs Get Paid Too Much, Essay Example

Pages: 1

Words: 324

Essay

Company CEOs are some of the most paid personalities. The question as to whether they are paid more than they deserve depends on many factors. This question can only be answered by three theories of justice in wages. These theories discuss why CEOs deserve or do not deserve to get that amount of money.

According to the agreement view, the fairest price for a CEO is arrived at through a negotiation between the informed company owners and an informed CEO. Such negotiations may be influenced by three factors; gratitude, self-interests and lack of reasons for directors to favor the shareholders. Therefore, the pay is considered fair if it emanates from the negotiation that is conducted in a fair manner between the CEO and the shareholders.

The next theory is the desert view. This analyses the CEO pay in terms of the company performance. It asserts that when the company performance is good, a CEO deserves to get a better pay and vice versa. The desert view analyses the job in terms of the amount of stress involved, the knowledge and skills required as well as its degree of responsiveness and importance. This view condemns the high CEO pays and insists on payment in accordance to the performance and responsibilities.

The latter is the utility view. According to this, the fairest CEO pay is that which can attract, retain, and motivate a talented leader. The skills and the nature of decisions involved make the job tough hence good payments. In addition, the jobs normally require much training as compared to others in the organization, a factor that highly contributes to higher pay. This view majorly dwells on attracting and maintaining a CEO in such economic competitive times.

In conclusion, the amount paid to CEOs can only be considered just if the CEO actions enhance organizational performance and growth. The market is getting highly competent and maintaining a competent CEO may mean good pay or something close to that

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