CEO essay
According to data provided by the Bureau of Labor Statistics (Krantz and Hansen 2011), in 2010 the average worker’s salary has increased by only 2.1%, while the salaries of CEO’s of top 500 corporations have risen by 27%. Median top 500 CEO salary in 2010 constituted $9 million (Krantz and Hansen 2011). This situation, along with high unemployment, layoffs and rising prices, are likely to cause dissatisfaction of the majority of employees. However, this phenomenon is quite expectable and is conditioned by several economic reasons.
First of all, CEO’s experienced significant salary cuts during 2007-2008 period; while for employees salaries did not drop severely, and layoffs were a more common issue than pay reductions, CEO positions could not be laid off, and instead reductions in payment, options and other benefits took place. Currently, when the economy is recovering, these benefits are partly returned, and the summary raise in wages depends not only on the increase of base rates. Since the reduction in CEO salary level was quite notable in 2007, the return to the comparable level resulted in such significant raise. Moreover, CEO salaries have not yet recovered to the level of 2007 year, so the growth of payment is quite reasonable.
Moreover, stocks characterized as underperforming in 2007-2008 started creating value in 2010, and thus overall increase in CEO payment can be to a certain extent determined by this tendency, too. In addition to this, the economy is currently rather tight, and CEO’s have to face greater responsibility and are often required to restructure the company or significantly improve its performance. Actions of current CEO’s of global companies determine the economic success and development for the next years, and they are among key figures responsible for the improvement of economic well-being in the country and for addressing unemployment issues. Thus, although the increase of payments for CEO’s might seem inappropriate and might contribute to unequal distribution of income, this rise in salaries has solid economic background and is likely to result in better economic future for the whole nation.
