Current Controversies in Executive Compensation: ‘Issues of Justice and Fairness’

I, for one, have never been fazed by sky high executive compensation. I am also not perturbed by the ratio of the CEO versus worker compensation. It used to be 42 to 1 in 1980. Now it is 400 to 1.

My rationale is simple. We live in a free market economy. We live in a free country. If the market provides for those numbers then so be it. If the workers do not like their pay, then they need to find some other place to work or become CEO.

Therein lies the problem. Does the market provide for these numbers?

Market inefficiencies have contributed to compensation figures, perhaps, not supported by it nor by the shareholders. Then the corporate “friends and family” program ensures that handpicked boards, in a quid pro quo, give the chief executive whatever he or she asks for.

How many workers have the opportunity to become CEO? How many can have their children become CEOs in our “free” country and economy?

Once again, the lack of opportunity is created by market inefficiencies, artificial barriers and “old boy networks” that prevent the “most qualified” candidate from becoming CEO. They lose, but more importantly, the shareholders lose. The latter should not be acceptable to any capitalist worth their salt.

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Posted on 06/02/2009 by

Current Controversies in Executive Compensation: ‘Issues of Justice and Fairness’ author sourabhhajela



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