Cooperation Executives Salary

Language 9 2/05/2012

Case Study: Should executives make the money they do? It is a well known fact that many people holding high positions in companies make an exorbitant amount of money. In 1970, CEO salary and bonus packages were typically about $700,000 worldwide- 25 times the average production worker salary; by 2000, CEO salaries had jumped to almost $2.2 million on average, 90 times the average salary of a worker worldwide, according to a 2004 study. In the past 12 years, there has been a 444 per cent salary increase for Canadas top CEOs. The top 10 earners collected a total of $60.7 million in 1996; however, by 2007, that number had jumped to $330.3 million. Chief executive officer deserve the money they make because the high pay seems small when compared to company profits and they are in the tough position of making decisions that affect the whole company. The CEO is responsible for the success or failure of the company. Operations, marketing, strategy, financing, human resources, hiring, firing, sales, all falls on the CEOs shoulders. It only makes sense that if the employee is directly responsible for the success of their company, then they deserve to get their payback. First, a CEOs salary is reasonable when compared to the profit of the company. When the public sees a salary that they consider to be too big, they are usually looking at only half of the picture. A recent survey of America's top 50 CEOs showed that their pay rose 5% to an average annual salary of $10.7 million. If one takes into account just how much the top 50 companies earn, on average, they generated $4.58 billion in profits from $64.2 billion in revenue. That means that, on average, a top 50 CEO made 0.016% of the revenue his company generated, or 0.23% of their profits. Not so bad is it? Furthermore, Stanley O'Neal was near the top of the list, having made $32 million in 2004. But O'Neal's company, Merrill Lynch, was not in the Fortune 50, coming in instead at number 58. Merrill generated $3.99 billion in profits on revenue, which means that Mr. O'Neal's salary was equal to 0.11% of revenues. Another, Robert Allen who runs AT&T has a total salary of 20 million dollars. This salary seems to be extremely high when put as a statistic by itself. However, his salary calculates to be 1/3,450 of ATT's gross. A CEOs salary looks acceptable after all the cards are laid out. Second, Corporation executives are in a tough position of making decisions that affect the whole company. Important decisions are made by them everyday, many of which decide whether a company will prosper, or go under. Many of them had to work their way to the top. They usually have extensive business backgrounds, and know their field well. There are very few people qualified, or knowledgeable enough to perform well in executive positions. Thus allowing them to demand the high pay that they earn. It has been established that top executives do make a lot of money. It has also been established that they deserve the money that they receive is well deserved. CEOs make important decisions everyday. They are under a tremendous amount of pressure to succeed. Their experience and everyday decision making affect the future of the company. Cooperation executives are well deserving of their pay.

Resources: Salary for Chief Executive Officer (CEO): Pay Scale: 30 Apr 2011 http://www.payscale.com/research/CA/Job=Chief_Executive_Officer_(CEO)/ Salary Average Salary of a CEO? Pay Scale: 31 Jul 2008 http://blogs.payscale.com/content/2008/07/ceo-salaries--1.html