CEO Pay essays

CEO Pay essays STATUS REPORT: WHERE WE STAND ON CEO PAY Recently, in a report on current CEO pay, CEO compensation seems to have become a major issue. In recent years, boards have shifted the mix of executive pay away from cash and toward stock options. Stock options now represent 53% of CEO compensation packages compared to 40% a decade ago. Options averaged $5 million in 1999, up 17% from 1998. Among major firms, 1998 CEO compensation averaged $30.5 million, up 36% from $22.4 million in 1997. That includes salary, bonuses, value of restricted stock and assorted perks, gains from exercising stock options and the 12-month rise in value of unexercised options. According to a 1999 article by Ron Yezzi of Minnesota State University, corporate CEOs in the United States, on average, earn 32 times as much as comparable CEOs in Great Britain, six times as much as those in Japan, and four times as those in Germany. While it may seem initially outrageous for a CEO to make 100 times the salary of a typical worker at the company, some perspective is necessary. Unlike the CEO of a large corporation, the typical worker does not have to make decisions that affect thousands, or even tens of thousands of employees, answer to the stockholders who demand higher profits and higher stock value, grasp all the workings of the corporation and oversee an efficient managing team, and take continual risks to insure the corporations competitiveness in a free market economy. One major factor in the escalation of CEO income is the practice of tying CEO compensation to performance. For example, defenders of Michael Eisners mind boggling compensation point out that he took Disney from revenues of $1.5 billion in 1984 to $18.7 billion in 1996 and that the stock rose from three dollars per share to more than $75 per share during that time. Millard Dexler, CEO of apparel chain powerhouse, Gap, is another example of the relationship betwe...