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Unformatted text preview: on 5R|SK.ANDREWARD oooon.once-00.00000...oone...000000000000...0.00.00.00.00 62 Fat cats inflammation of large companies has risen dramatically over recent years. But are these (fat cats> really worth the money that they take home? THE AMERICAN VIEW The pay for the bosses and top executives $53; This is part of a special report on executive pay by the American magazine, Business W/ee/e. Read the article and then discuss these questions. 1 Does the level of executive pay in the USA surprise you.> Does it seem very different from the situation in your country? 2 Is the comparison between American business and business in the rest of the world a fair one? 3 What arguments in favour of high levels of pay for executives does the article give? Do they convince you? Why — or why not? T he stock market has made many people wildly wealthy, and none more so than chief executives at major US companies. Thanks to a pay structure that has linked most executive compensation to the stock market, the head of a large public company made an average $10.6 million in 1998. That's a 36% hike over 1997 — and an astounding 442% increase over the average paycheck of $2 million pocketed in 1990. But if the numbers are staggering, so too has been the performance of American business. While tradition—bound Europe struggles to boost growth and entrepreneurialism, debt—soaked Japan remains mired in recession and much of the developing world fights to regain its economic footing, US executives are energizing older companies and creating new ones daily. The obvious questions: Are the sky—high pay EXecutive Pay the boss makes the moves that benefit all investors, fine. The CEOs who have responded to the challenge have created billions in value. And those who fail are pushed out far more quickly — albeit with golden parachutes. and the sky~high performance linked? Has pay for performance worked? ls CEO greed good? Supporters of today’s compensation system say this performance is no coincidence. If paying top dollar is the price of ensuring that I GLOSSARY I hike increase to be mired in to be stuck (in a bad situation) to pay top dollar to pay the highest price golden parachute a sum of money paid {0 an executive when he or she leaves a company Business Week 19. 3.99 MORE JUSTIFICATIONS justifications. I to acknowledge exceptional talent I to encourage people to take risks eases Discuss these questions. Good performance is not the only justification for high earnings. Here are four other possible I to reward contributions to society in general I to compensate for sacrifices that a person has made 1 Can you think of any jobs or professions in which earnings are at a high level for any of the above reasons? 2 Could any of these reasons he used to justify the high levels of executive pay? 3 Can you add any reasons to the list? 0000.00COO00000000000000.0000...OOOOOOOOOOOOOOOOOOOOOOOO. 5 BISK-ANDFEWARD’OI ARE THEY WORTH IT? These people are some of the world’s biggest earners in their fields. I How would you justify the amount of money that they earn? 2 V/hich ones do you think are worth it? Compare your ideas with others in the class. Anthony Rohhins is an American guru who specialises in helping people to achieve their pea/e performance. With fees ofooer $75, 000 per day, its estimated that he mahes over $50 million a year from his hoo/es and seminars. was considered to he the gr] hest golfer in the world, 4 Yiger l/Voods earned $7.5 million in prize money, and a great deal more fiom advertising and endorsements. PAY AND YOU I a In 1999, a time when he aha W/ith a career that includes films such as Pretty Woman and Notting Hill) fulia Roherts is prohahly Hal/woods hest paid female star, earning around $17millionfi)r each film. fatter”? Talk about the following. As CEO of Computer Associates International, Charles B. Wang made $670 million in 1999. Much of this sum was paid as a honusfor helping the company’s share price achieve its target for the year. In August 1992 the financial specuhztor George Soros made $1 hillion in a single day when he gamhled on the British pound sterling leaving the European Exchange Rate Mechanism. Margaret Whitman, ChicfExecutive Ofiicer of the LVeh auction site e-hay, earned $24.7 million in her first year in the joh. The average American boss earns over 400 times as much as the average American worker. If you were the boss of a large successful company, how much more than your workers would you expect to earn? Explain your decision. 63 ...
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