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ARE CEOs PAID TOO MUCH?
Are CEOs Paid Too Much?
Introduction
organizations are always fighting to employ the most performing CEOs. Their level of
payment is generally very high as compared to other employees in the same organization.
Throughout the years, there has been a constant debate on the issue of CEOs pay. According
to Kiatpongsan & Norton (2014), organizations should try as much as possible in order to
achieve equal remuneration for all the workforce in the working places. Too much pay for the
CEOs has a negative impact on the economy of the nation. The payment gap should be
maintained at small ranges in order to avoid the issue of salary inequalities and many other
Firstly, too much pay has resulted in increased inequalities. All over the globe, the
CEOs are being paid more than any other worker in the workplace. This has greatly increased
the gap between the two parties in terms of salary remuneration. In the long run, it has led to
the problem of inequalities in relation to their pay. This issue ends up making other workers
feel that they are not recognized in the organization (Ridge et al., 2015). The rising of social
problems in many firms, for example, conflicts, is mainly a result of the increased level of
inequality. This has also demotivated other employees in the workplace making them
underperform in relation to their duties and responsibilities. Lowering the morale of workers
limits the success of any firm. The payment gap should be reduced in order to acknowledge
Secondly, too much pay has also created a negative effect on the returns of the
shareholder.
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ARE CEOs PAID TOO MUCH?
If the CEOs are given salaries that are higher than their overall contributions to the
organization, the returns of the shareholder might be stolen. The pay of the CEOs in relation
to the rate of returns meant for the shareholders is very low (Cooper et al., 2016). This has
greatly lowered the morale of the shareholders in investing in such firms. Many organizations
have gone bankrupt because of spending too much of their profits in paying the Chief
Executive Officers. The money which was meant for expansion of the business is used to pay
the CEOs. Companies should always emphasize the element of minimizing costs and at the
Thirdly, too much pay of CEOs results to the financial crisis. The amount of money
used to pay the CEOs is generally very high. This has created some adverse effects on the
economy of the nation at large. Many firms have been closed because they are not able to pay
their CEOs. The amount is very high as compared to their monthly profits. The financial
crisis has mainly affected the investment banks all over the globe (Chyz & Gaertner, 2017).
For example, the largest investment bank in the United States known as the Lehman Brother
ended up being bankrupt as a result of the financial crisis. The closure of such institution
forced their government to establish some rescue plans in order to recreate them. The
government has spent a lot of money on such rescue programs. The money could have been
saved and used to develop other sectors of the economy if only the remuneration of the CEOs
On the other hand, the high remuneration for the Chief Executive Officers is mainly
due to their higher experiences and skills in relation to the particular job.
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ARE CEOs PAID TOO MUCH?
More experienced CEOs end up delivering higher results at the end. The high payment is
only meant to motivate them and increase their morale in performing various activities at the
workplace. They deserve to be paid more than any other employees because of their influence
on the general success of any organization. Many of the recent innovations are as a result of
the creative skills of the Chief Executive Officers. Innovations play an important role in
making an organization able to compete with others in the world market. Advancement in
technology has created more competitions in the business sector. The success of the
organization is attained through the inputs of both CEOs and other employees. CEOs should
not be treated as being more important than other workers in the organization.
Conclusion
In conclusion, the too much pay for the Chief Executive Officers is mainly
exaggerated. Both public and private organizations should emphasize on the issue of equal
pay. The ratio of the payment between the CEOs and other employees should not be very
high. The success of the organization is attained through the inputs of both CEOs and other
employees. CEOs should not be treated as being more important than other workers in the
organization. Unequal payment may result in the element of discrimination. When workers
are being discriminated they end up delivering poor results because of their low morale. The
payment gap should be maintained at small ranges in order to avoid the issue of salary
inequalities. The payment for the executives should be controlled so as to avoid it being in
excess and exaggerated. In the near future, the society should impose the maximum
Chyz, J. A., & Gaertner, F. B. (2017). Can Paying “Too Much” or “Too Little” Tax
Cooper, M., Gulen, H., & Rau, P. R. (2016). Performance for pay? The relation between
Kiatpongsan, S., & Norton, M. I. (2014). How much (more) should CEOs make? A universal
Ridge, J. W., Aime, F., & White, M. A. (2015). When much more of a difference makes a difference:
Social comparison and tournaments in the CEO's top team. Strategic Management