Executive Pay The Invasion Of Supersalaries - 2074 Words

In Peter Eavis’ article â€Å"Executive Pay: The Invasion of Supersalaries† the conflict of CEOs and top executives outrageous pay grade is discussed. Even though the â€Å"compensation machine† of Corporate America is running smoothly, there are multiple negative and dark undertones. In fact, many people believe that these shocking salaries are the roots of inequality within America. Currently, some CEOs are being compensated millions and millions of dollars as their normal annual salary. Even though the current executive compensation system focuses on performance and can â€Å"theoretically constrain pay,† there is nothing stopping the companies from giving their CEOs more. According to the Equilar 100 C.E.O Pay Study, â€Å"the median compensation of a†¦show more content†¦This focuses on the idea that much of the company’s growth will reflect towards equity-based salaries. By doing this, it will â€Å"align the interests of corporate management with the company’s shareholders.† Essentially, if the company does well, then the executive will be compensated higher. This will encourage management to work harder to improve performance thus increase the stockholders wealth, as well as their own when stock prices rise. However, there have been many cases where the CEO and executive officers receive outrageous compensation even when the companies suffer. Overall, there is a wide disconnect between the incentive of the executives and the financial performance of their company, which needs to be fixed. By passing regulations and rules such as the Dodd-Frank Act, there is hope of shedding light on the connection between the company’s performance and the executives pay. Although it will provide a clear insight, it will not be able to set a strict regulated compensation or define what an executive should earn. Instead regulations will allow for more transparency for the shareholders regarding corporate go vernance issues such as executive pay. Along with that, it will force companies to take accountability for their actions. If they do poorly, then the executives should be paid less, and vice versa. Overall, there should be a direct alignment between executive pay and the company’s