Recently, in a report on current CEO pay, CEO compensation seems to have become a major issue. In recent years, boards have shifted the mix of executive pay away from cash and toward stock options. Stock options now represent 53% of CEO compensation packages compared to 40% a decade ago. Options averaged $5 million in 1999, up 17% from 1998. Among major firms, 1998 CEO compensation averaged $30.5 million, up 36% from $22.4 million in 1997. That includes salary, bonuses, value of restricted stock and assorted perks, gains from exercising stock options and the 12-month rise in value of unexercised options.

According to a 1999 article by Ron Yezzi of Minnesota State University, corporate CEO's in the United States, on average, earn 32 times as much as comparable CEO's in Great Britain, six times as much as those in Japan, and four times as those in Germany. While it may seem initially outrageous for a CEO to make 100 times the salary of a typical worker at the company, some perspective is necessary. Unlike the CEO of a large corporation, the typical worker does not have to make decisions that affect thousands, or even tens of thousands of employees, answer to the stockholders who

TAKE A POSITION: SHOULD A LIMIT BE SET ON CEO PAY?

Even when a corporation is not in crisis, directors do not want to appear to be paying bargain-basement wages - by paying CEO's such high amounts, companies are showing that they are making a commitment at the top that will trickle down to even the lowest workers. Holding down CEO's pay can reduce the pay of other executives, because their pay is usually a percentage of the CEO's. In a case where a company is striving to become a top performer, attractive pay packages seem to be a necessary reward for those who are asked to lead the company. Although a large compensation package may not be necessary to motivate a CEO to work hard and be productive, it could be the only way to attract a top-executive to a firm and to remain competitive in the ever changing corporate market. The fact that a CEO makes so much more than the average worker is no more ethically unfair than the fact that a famous athlete such as Michael Jordan makes countless times more money than surgeons who save lives. Fairness is not the issue. Many CEO's are not driven by money, but by the rewards gained from the challenge of managing companies. People who work long hours and who are burdened with so much responsibility should be paid more than the average employee. A CEO's work consists primarily in making decisions - decisions about what products the company should produce, how much it should invest in improvements of its equipment, whether it should raise money through stocks or bonds, etc. A company's wealth is not produced by blind, uncoordinated actions. The CEO is also responsible for ensuring that a company's resources and personnel are being used productively. The best employees in the world, working the longest hours, are useless unless they are making a useful product backed by good business decisions, such as those make by CEO's.

The high, sometimes extremely high, pay of CEO's in many American corporations has caught the public's eye. What the public needs to understand is that executive responsibilities and skills call for higher salaries. For instance, in big multi-national organizations, they are the heads of a number of substantial corporations reporting into a worldwide organization, which is a significant responsibility. If the companies do not perform, the CEO is responsible. Therefore, because of the major responsibilities CEO's are faced with in everyday business decisions, there is not a justification for a limit to be set on the amount of money a CEO takes home.

CEO's in the United States get paid far more than CEO's in other countries. CEO pay sometimes comes out to 325 times that of the average worker. Many critics express their feelings of how CEO's get paid too much, while others defend CEO pay by stating that the deserve it, they work for it, and that it is an internal issue that should not be determined by the public.

PAY-FOR-PERFORMANCE AND JUSTIFICATION FOR CEO PAY

Analyzing CEO's pay further, an employee should be paid in proportion to the value he/she brings to the company. So, by this, there should not be anything erroneous about paying CEO's such extremely high salaries, consid

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