I’ve been seeing a lot of media attention on CEO salaries in the wake of the current economic crisis. Many people are really upset that CEOs get paid SO much money and huge businesses are failing regardless. Are the huge salaries justified?
CEOs get paid the market rate based on experience and responsibilities. The FACT is that running a large company isn’t easy and it can’t be done by just anyone. I wouldn’t want the job no matter what the pay. I’m not qualified.
I’m NOT saying that every CEO earns their pay. Every company is ultimately the responsibility of the CEO and if it fails then he or she must take their share of the blame. Obviously there are some CEOs that didn’t do a good job, but consider the number of companies that are actually out there making a profit. The only ones who can determine what they should be paid are the people that they report to – the owners of a private company OR the stock holders of a public company.
So, why do the CEOs make so much money? Again it’s their responsibilities, experience, and past success. Remember that they are hired to make their company profitable. A CEO makes all the big decisions which affect every employee and owner/stockholder. When you are talking about multimillion dollar companies employing hundreds or thousands of people, does it make sense to pay less than market value for senior management?