After learning about all of these companies that have been brought down by their own internal controls, I thought it would be interesting to assess the compensation of corporation executives, and evaluate whether their pay is justified or not.
According to Business Week, the average CEO of a major corporation made 85 times the average hourly worker’s pay in 1990, and by 200, average CEO salary was calculated to reach an unbelievable 531 times that of the average hourly worker. The term “Pay for Performance” is the term used to define the executive salary in conjunction with the prosperity of the company. This reasoning would allow me to determine whether the company’s value should even be based on the talents of its leaders.
So how much is too much? Should the public be notified of the salaries, perks, and bonuses of an executive? Is it fair for the CEO to deserve a hefty income due to his or her education or business background rather than scaling it in terms of company performance?
GE, which makes products ranging from kitchen utilities to jet engines, as well as financing projects like NBC Universal, gave Immelt a pay package valued at nearly $11.4 million. General Electric also gave him use of the company aircraft, car allowance and other perks valued at $447,191, up from $389,809 in the prior year. Utilizing the General Electric Company as a case to base my research, these are questions I would like to address in Paper 2.