Is CEO Compensation Justified By Performance?

4 Pages 1110 Words

This report explores the issue of pay that top executives make, and if they are compensation by performance. After reading the section “ Is CEO Compensation Justified by Performance”, in the book Taking Sides. I would have to agree with Kevin J. Murphy, for the fact, chief executive officers are responsible for the success of a business and therefore deserve to be compensated. Top executives are under a lot of pressure being the chief executive officer (CEO) of a business and it is not an easy job. In addition, these top executives also have years of experience and education behind them. And when a board of directors set standards for chief executive officer (CEO), salary and incentives they have one thing on their mind, as they should. How qualified is this person and will they bring in a profit for the business and their shareholders. When setting up this package, there is no doubt, that their compensation is based by performance among other things. In particular, I found it amazing when I was researching this issue, that almost all the data available, compares top executive pay to that of a regular worker. I have tried to apply logical thinking to this issue, but find myself at times coming to hasty conclusions. I now have a better understanding on the issue of double standards. Which seems to be the fallacy of choice when it comes to executive compensation benefits and pay.
In addition, top executives are under an astonishing amount of pressure to succeed. They face the task of making sure a company stays on an even keel, shows profits, and to insure no scandals happen. There are only a few other postions that put an employee in this situation. Furthermore, they make important decisions everyday, many of which decide whether a business will prosper or go under. This is where I found one display of a double standard, Lisa H. Newton, stated, “ We can understand that some people are lucky (born with the perfect pitch) and o...