CEOs are overpaid

CEOs are overpaid - 1. CEOs are paid too much i. In the...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
1. CEO’s are paid too much i. In the last 10 years there has been a major loss of respect for this country’s corporate leaders. For example the fall of Enron, Tyco, Adelphia, WorldCom, and many others. 1. CEO’s defend themselves by saying that it’s just a few rotten apples. 2. Myth #1 – CEO pay by competition i. The first myth is that CEO pay is driven by competition. ii. It’s actually driven by outside consultant surveys iii. Many decision making board members believe that CEO’s has to be in at least the top half and maybe top quartile of the pay scale. 1. If a inferior employee gets a pay raise then the CEO gets a pay raise too so that they stay in the top half or top quartile. iv. Dupont uses a simple system of internal pay equity, they look at people who run the businesses , who make decisions on prices, and new products with guidance from the CEO 3. Myth #2 - Compensation committees are independent i. Consultants talk to the HR vice president, who talks to the CEO. The CEO says what he
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/09/2009 for the course ECON 367 taught by Professor Molly during the Spring '09 term at Ohio State.

Ask a homework question - tutors are online