Corporate executives

The Role of Corporate Executives

The top management of a company is represented by corporate executives. Both the chief operating officer and the chief executive officer are among them. They may also be distinct from managers and bosses. They are in charge of running the business, and a board of directors is informed of their plans and actions. They are in charge of developing the long-term strategies for their company or division while taking into account how the projects will be created and carried out. Typically, they collaborate with a board of directors who give the plans their blessing before they are put into action.

Controversy Over Executive Compensation

A company’s individual performance frequently relies on the group efforts put forth by the employees. Despite this fact, a majority of the corporate officers are overpaid for work that they have not done. Majority of Americans believe that chief executive officers as well other corporate executives are overpaid as compared to an average worker (Miller). They are apparently taking home with them more compensation than they merit. It is considered that many corporate executives earn more amount of money than the work that they do. The difference in payment between the executives and the average employees and workers contributes majorly to inequality in income as well as wealth than viewed previously. Australians and Europeans believe that business executives in their respective countries are paid more than they should be and that their salaries should be limited.

The Extent of Executive Salaries

The compensation figures of these executives are higher than the public can comprehend (Lynch). It is hard to believe that a single person could earn as much money as the corporate executives. Over the years, the salaries of chief executive officers and chief operating officers have been increasing to a point where they earn approximately 100 to even 300 times the amount of money that their employees make. This has long been a controversial issue in the United States ever since the wages and salaries of the average employees and workers stagnated. The media keeps records and rank the highest paid, but they fail to show the extent to which their pay packages and their salaries affect people and businesses. Basically, instead of firms raising the workers’ salaries or distributing income and revenues among their shareholders, they choose to increase the pay for the corporate executives.

Attempts to Address Executive Salaries

Despite people’s expectations of the executives’ pay to be a controversial political issue, many legislations as well as regulations have been passed and thus favor this matter. A lot of formal efforts have been made to deal with the reduction of the salaries of these executives but have all been in vain. In the early twentieth century, industries were changing from small firms to large corporations. It was during these times that the firm owners decided to opt out of the daily management, the executive roles were made, and management became a profession. Shortly afterward, the executive salaries began to skyrocket together with its objection from the American people.

Flaws in Executive Salary Determination

The increment in the executive salaries was because several companies believed that it would help inspire their chief executive officers as well as the chief operating officer. Most companies base their pays on the theory of marginal productivity that states that any employee or worker should be paid respectively what he or she adjoins to the company’s income and revenue. The corporate executives’ salaries, however, do not follow this theory. This is since it is considered to be impossible to measure a CEO’s or a COO’s pay about his contribution to the company. This also reduced the belief that the increment of the executive’s pay helped the company’s executives to conduct business about their desires.

Works Cited

Lynch, Shana. “Are CEOs Overpaid?” Stanford Graduate School of Business, 17 Feb. 2016, www.gsb.stanford.edu/insights/are-ceos-overpaid. Accessed 10 Dec. 2017.

Miller, Stephen. “CEOs Vastly Overpaid, Most Americans Say.” SHRM, 31 Mar. 2016, www.shrm.org/resourcesandtools/hr-topics/compensation/pages/ceos-overpaid.aspx. Accessed 10 Dec. 2017.