John H.Hammergren,the world’s highest paid CEO.
This week in Comm 101 we started to discuss the idea of Business Ethics and Social Responsibility of Corporations. Often when people think about ethical issues in the business realm, they think of child labour, sweat shops or morally ambiguous marketing schemes. However, one of the issues that is discussed less frequently is the matter of executive compensation. Currently many top executives in the USA receive compensations that are 231 to 380 times the amount of an average employee. The following article demonstrates that such practice is both illogical and unethical as it harms the corporation in the long run by cultivating a culture that is driven solely by numbers.
http://business-ethics.com/2012/09/29/1233-ceo-pay-time-to-retire-the-rock-star-messiah-myth/
The excessive pay is controversial due to several reasons. First, some of these generously paid CEOs have, at best, questionable performance. Second, it has been shown that the excessive compensation harms the overall morale of the corporation as it foster dissatisfaction among employees. These two phenomenons directly contradict the responsibility of executives, which is to serve the investors and lead their corporations. The following article again demonstrates the various ethical and strategic problems commonly associated with overly generous executive pay.
http://money.cnn.com/magazines/fortune/fortune_archive/2006/07/10/8380799/
Furthermore, in the above mentioned article, it is stated that some ways in which these compensation are given rewards the CEOs at the expense of the shareholders, such as option backdating. This again contradicts the basic responsibility of CEOs, which is to serve the investors.
Additional Reference:
http://bigstory.ap.org/article/mckesson-ceo-entitled-record-159m-pension
Picture Reference:
http://binaryapi.ap.org/294733c852b7470bbc800529f7ee2115/460x.jpg
