I had a question from Stacey
I am taking an online college course and my teacher has given us a discussion topic “Do you believe U.S. executives are overpaid?” I was wondering if you could help me and tell me why they get paid as much as they do. It would really help me out.
So do i think they are overpaid - well YES and NO. So … why yes and no?
I think that some may be overpaid and this therefore creates a stigma over all CEO’s. Many CEO’s earn around $500k, have equity in the business, are madly passionate about the business’ success, sacrifice alot (including family) and create jobs for many employees. These are not the CEO’s who are earning $20m for a year.
The second point i would like to raise is that sometimes the bonus criteria that lead to large CEO payments don’t appear to be well thought through. You often hear of a CEO getting paid a $5m bonus but the share price has dropped 25% during the year. When you hear this, you have to wonder what was going through the minds of the Board when they put the bonus criteria in place.
The final point i want to make is that being a CEO is not a simple job. You are constantly balancing the requirements of a board, share holders, the market, customers, amd employees. You have to deliver growth and be measured each and every quarter. You will be scrutinized by everyone and have no one to talk to. If you make one mistake you are out and your career is over.
A final comment … i think golfers, footballers, basketball players, actors etc are all over paid in comparison to CEO’s. Do any of the above create jobs, create a long lasting business, or help put the food on the plate of families?
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