Are top executives paid too much? A study of CEO

Are top executives paid too much? A study of CEO

Are top executives paid too much? A study of CEO compensation revealed that CEO bonuses rose considerably—from 20 percent to 30 percent—even at companies whose revenues or profits dropped or those that reported significant employee layoffs. Such high pay for CEOs at underperforming companies, as well as CEO compensation at companies with stellar results, has raised many questions from investors and others. CEO pay has risen considerably in recent years; in 2004, for example, the average pay for a CEO at a public company was $11.4 million— versus just $27,000 for an average nonsupervisory production worker’s pay. Under proposed regulations, the Securities and Exchange Commission (SEC) would require public companies to disclose full details of executive compensation, including salaries, bonuses, pensions, benefits, stock options, and severance and retirement packages. Even some CEOs question the high levels of CEO pay. Edgar Woolard Jr., former CEO and chairman of DuPont, thinks so. “CEO pay is driven today primarily by outside consultant surveys,” he says. Companies all want their CEOs to be in the top half, and preferably the top quarter, of all CEOs. This leads to annual increases. He also criticizes the enormous severance packages that company boards give to CEOs that fail. For example, Carly Fiorina of Hewlett-Packard received $20 million when she was fired. Using a Web search tool, locate articles about this topic and then write responses to the following questions. Be sure to support your arguments and cite your sources.

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