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Ethics Of Pay

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Most companies across the world, pay their Chief Executive Officers (CEOs) and senior management level employees significantly more than lower level employees. This huge wage gap has existed for a long time. The Lawrence Mishel study “The State of Working America 2005,2006”, reveals that the ratio between CEO pay and average company pay has increased from 24 to 1 to close to 300 to 1, over the past 40 years (Mackey, J. (2009, June 17)). A CEO is usually the highest ranked executive manager in an organization or corporation and their duties vary based on an organization’s mission, goals, products, size and number of employees. Responsibilities may include executing and communicating the vison, mission and strategy of the organization, overseeing the duties executed by other executive leaders, reporting to the Board of Directors, overseeing the success and profitability of the organization and dynamic and effective leadership. For decades there has been the discussion as to whether or not a CEO’s pay seems ethical, especially when there are many hardworking employees who are being paid the bare minimum. A CEO is usually appointed and not hired into the role and as such basically determines his own salary. Although this is something that should be supported by the Board of Directors of the company, it may never be a fair assessment, as Board …show more content…

It is evident by the huge wage gap that salaries are not fairly distributed amongst employees. Take for example a company that compensates performance based on an employee’s annual basic gross salary. Once the company meets its targets and realizes a profit, all employees should benefit. However, some will benefit more than others because the share is not a percentage of the profit that is distributed equally, but a percentage based on an individuals’ salary. Therefore, it means that the highest paid employee will take home the highest compensated

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