Despite everything that is growing around us there are still few things that have stayed the same; for example, the average American income for 99 percent of the population. In 1998, the income of an average American taxpayer was $33,400. Two decades later in 2008, the average income was still only 33,000 (Censky, 2011).
What about the other one percent of the American population? Well, those making $380,000 or more per year have experienced a change mimicking our country’s technological development, seeing upwards of a 33% increase in annual income (Clark & Bobo, 2012).
So who exactly qualifies as part this one percent? The majority of us work for them. It’s the chief executive officers (CEOs) of our nation’s most successful companies. To further illustrate just how large of a gap has formed between income levels, we can look at comparisons in pay rates over the years. Looking back at 1980 again, CEO pay was 42 times the median worker’s pay. By 2010, CEO pay had increased to 343 times the median worker’s pay (Clark & Bobo, 2012).
In extreme cases, such as the highest paid U. S. CEO Philippe P.
Dauman of VIACOM, an employee of his earning the median salary would have to work for 2,497 years in order to match what the CEO earns in just one year. This is by far the widest gap in the world, and has started to cause many problems amongst the remaining 99 percent of the American population. One important issue that’s constantly argued is the fairness of obtaining pay. Any American citizen employed in any type of workforce position has to do some form of work in order to receive compensation. Many people are even in positions where tips make up the majority of their income.
The Essay on American Ceo Pay Average Times
... than 400 percent totaling to approximately $14 million per year. When compared to average workers, the pay increase ... my opinion, CEOs are overpaid in the current American corporation. They should only be paid up ... performers are paid at or below the average income level. CEO's also claimed that their decisions ... like Canada, Britain and France, the typical CEO receives about 1/3 the salary of CEOs ...
For these citizens, their performance on the job has a direct affect on how much money they make each week. Of course a CEO has a very wide variety of tasks and duties he or she must complete, but for a major portion of their income they do not have to do any work at all. This is where stock options and restricted stock come into play. Stock options are the ability to buy company stock at a set price at a later date. Restricted stock is stock issued directly to the CEO that can’t be sold usually for three or four years (Nickels, McHugh & McHugh, 2010).
Stock options now account for over 50 percent of a CEO’s compensation and restricted stock makes up almost 25 percent (Nickels, McHugh & McHugh, 2010).
This means that close to 75 percent of a CEO’s annual income isn’t from job performance at all. So even if a company is losing money and facing severe economic downturn, the stock a CEO possesses keeps his wallet very full. Another problem Americans see with this issue is that not a whole lot has been done by the government to stop it.
In fact, many of the decisions the government has made have only fueled the fire. In 2006, the U. S. Securities and Exchange Commission (SEC) updated its rules for the disclosure of CEO salaries, and executive salaries. These new rules require that CEO salaries and executive salaries be explained in terms a layperson can understand (Lyon, 2008).
In other words, executive salaries must be broken down and detailed to report pension, estimated severance packages, bonuses, stock grants and salary increases (Saez, 2010).
However, simply knowing the specifics of a CEO’s salary doesn’t necessarily give an explanation for the salary itself. In many cases it actually does the opposite. Upon seeing the specifics for the amount of money a CEO is paid, it often contributes to the outrage. Take severance packages for example. When the average employee in no longer benefitting the company, chances are they will be let go. Besides a final paycheck for hours worked and the possibility of unemployment collection, they do not receive anything else from the company.
The Essay on Companies should spend money on improving the work skills of their employees
Companies should spend money on improving the work skills of their employees as it is to be seen from the leading top businesses that this will result in high success. Firstly, the more investment is made in improving a certain aspect, better results follow. By spending money on improving the skills, it will allow more productive workers making the production rate efficient which all leads to ...
When a CEO is no longer performing up to standards, they are forced to resign but walk away with much more than a final paycheck. Chuck Prince of Citigroup was shown the door after the company lost $64 billion in market value, yet he left with $68 million and a cash bonus of $12. 5 million (Nickels, McHugh & McHugh, 2010).
Not only are CEOs paid a substantial amount more for their work, they are paid a substantial amount more to leave the company all together. In 2009, President Obama and Congress put limits on executive ompensation of firms receiving money under the federal government bailout programs. The payout to CEOs leaving their companies was limited to $500,000 but it wasn’t for all companies across the board. This new limit only applied to companies who had borrowed money from the government during periods of economic downfall and hadn’t yet paid it back. Despite the decrease in monetary payout, CEOs were still allowed a decent portion of restricted stock which amounted for a fairly large payout when the stock could be sold a few years down the line.
According to the majority of American citizens, top-level executives are paid more money in a year than they should make in a decade. Despite the negative perspective on CEOs, they still play a huge role in helping the economy. They create many job positions and with the unemployment rate at 8. 5 percent, the nation can use as many additional jobs as it can get. CEOs also contribute majorly to the growth of our country with how much they increase the tax base. They give us a competitive edge in the world markets.
