Many executives in American companies are seen as more highly compensated than necessary while the majority of employees are poorly compensated. Even so, the cost of executive compensation in many organizations continues to rise despite the efforts that are in the country to reduce company spending (Kaplan, 2013). Moreover, despite the fact that the pay of chief executive officers is increasing steadily, a firm’s performance directly depends on the performance of these leaders (Kaplan, 2013). Therefore, many organizations are finding it necessary to handsomely pay CEOs who perform well to keep them in their companies (Kaplan, 2013). I do not think the CEO pay is fair where fairness refers to impartial compensation of all employees without favoritism. CEO pay is unfair and should be cut down. …show more content…
Moreover, the pay of many CEOs does not align with the work they perform (Holmberg & Schmitt, 2014). Arguably, it is impossible to measure the performance of a CEO when the total output of the company depends on teamwork, which comprises employees from all levels in an organization. Also, I believe that the increase in CEO pay is responsible for increasing economic inequality in America, which has made the majority of the nation’s wealth to be held by a few people while the rest of the population struggle with high cost of living. I think that one of the major reason companies are rewarding CEOs handsomely is because firms consider these executives to be risk takers. However, paying CEOs with stocks makes them become rich quickly without taking any risks (Holmberg & Schmitt, 2014). The increase in pay makes the CEOs take high risks which ultimately benefit them and result in price volatility of the shares and bank failures (Holmberg & Schmitt,