Introduction: The rising rate of executive salaries increases is unethical in light of problems facing American business including the threat of global competition. Among the problems is the fact that executives are getting wealthy and receiving huge compensation packages while jobs are being eliminated by automation or my moving operations offshore. Another reason many executive compensation plans are unethical, is that they are fundamentally unfair. Specifically, it is not uncommon for a CEO of a publicly traded company to earn 200 to 300 times what the average employee in their company earns in a year. Another ethical problem is the fact that many compensation demands by CEOs are essentially rubber stamped by the Board of Director's compensation committee. It is also both ill advised and unethical to pay CEOs without respect to the financial performance of the company, which suggests that far more compensation to senior executives should be variable compensation and much less should be fixed compensation.
According to an article written by Jason Gabrielli and published in Business Insight (online), the term greed evokes images of ruthless corporate executives plundering companies and ruining lives to support a lifestyle marked by excess. However, applying this label to all corporate executives is not accurate despite the fact that corporate corruption has been front page news ever since well known companies including Global Crossing, Enron, WorldCom and Adelphia filed for bankruptcy protection shocking creditors, banks, shareholders, employees and the public.
Many critics of corporate America believe that one issue remains excessive executive compensation. According to Gabrielli, executives of large, publicly traded companies are usually highly compensated for their services even when performance measures such as stock performance make it seem like they are not capable of doing what they were hired to complete. In 1982,...