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Many CEOs are not Paid According to the Principles of Expectancy Theory Over the past 25 years CEO pay has risen regardless of the economic or

Many CEOs are not Paid According to the Principles of Expectancy Theory Over the past 25 years CEO pay has risen regardless of the economic or political climate, and faster than corporate profits, economic growth, or average workforce compensation. CEOs are getting $100-million-plus severance packages while their firms are getting hammered as a result of the subprime mortgage fiasco. Is the time right for major reform of CEO pay? Although governments may come up with new reforms, corporate boards can always find a way around the rules to pay CEOs whatever they want. Corporate proxy statements indicate that firms are reporting specific performance targets on which CEO pay is determined, as required by the SEC, but they are using so many different formulas that the end result is that the firms are still paying CEOs as much as they want. Is requiring CEOs to own a lot of company stock the solution? If stock is used as a compensation tool, the stock should be unavailable to the CEO for some period of time, to prevent short-term gaming of the system by manipulating stock price. For Discussion: Do you think that CEOs’ pay should be tied to corporate performance? Explain. Discussion responses are subject to a word count for substance.
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There is no doubt that Chief Executive Officer of the company is the highest earning
employee of the company. But it is not fair to give the pay of a CEO more than what he
expects or deserves. In...

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