CEO

Are CEO's worth a Million Dollars or More a Year?



Are CEO's worth a Million Dollars or More a Year?

Abstract

The paper is an argument related to the salary of CEO and does it comply with their effort and hard work in the company or not. A few studies have shown that the profits suffer because of the huge salaries of CEO of the company. While a high or low CEO pay slice does not necessarily reflect an underlying problem, it is important for investors to establish whether an abnormal level is warranted, and to understand how the CEO's share of top executive pay might affect a firm's performance. It should be no surprise that the median CEO to median worker hourly earnings ratio increased over time. The ratio of CEO pays to those in jobs at the bottom of the earnings distribution. Scrutiny is needed in cases where executives collect high eight-or seven-figure payouts during times when their firms performed poorly. From a fund shareholder perspective, the compensation that is awarded to portfolio managers, as opposed to C-level executives, typically is more important. It's crucial that these investment executives be compensated for their portfolios' performance.

Thesis statement

The paper is an argument related to the salary earned by the CEO. The paper argues if the salary earned by CEO on an annual basis is really worth it or not.

Introduction

According to a recent study profitability tends to suffer when chief executives get paid significantly more than their senior executive cohort, new research shows. Executive pay will figure prominently as the annual general meeting season starts this week, with investor groups threatening to embarrass companies that pay their chiefs too much. CEO pay slice is negatively correlated with accounting profitability. Firms with a high CEO pay slice tend to have a lower industry-adjusted operating income to assets ratio. The slice is defined as the chief executive's share of the aggregate compensation of the top five executives (Reich, 2007).

It is not the case that all companies with high CEO pay slices are poorly managed and would benefit from reducing the CEO's share of executive pay. While a high or low CEO pay slice does not necessarily reflect an underlying problem, it is important for investors to establish whether an abnormal level is warranted, and to understand how the CEO's share of top executive pay might affect a firm's performance. Aside from the negative correlation already noted, ...