Individuals who are at the helm of major corporations are often paid excessively high salaries in comparison to normal employees. Some people say that this is justifiable, whereas others claim that this is discriminatory. In this essay, I will discuss these two views before putting forward my own opinion.
On the one hand, high CEO pay can be approved because of a number of reasons. First and foremost, most people take the helm at big firms when they are in their late 50s. Decades of persistent hard work have allowed them to accumulate work experience and have business acumen. Thus, seasoned CEOs deserve their astronomical pay rate because their expertise and business competencies help enterprises operate optimally in order to generate revenue and succeed financially. However, despite numerous monetary and non-monetary incentives associated with the title, being an authoritative figure can be a double-edged sword. Being held in charge of a major organization means that CEOs usually have to make important decisions. One wrong decision can reverberate across the entire company as well as their personal life, placing both the operation of the business and their own career in jeopardy. As a result, it is fair to say that being a CEO is a lucrative yet high-risk career and as the saying goes, the higher the risk, the higher the reward.
On the other hand, some people believe that excess managerial pay is the key driver of inequality. They point to the fact that while CEO pay has been accelerating exponentially over the past few decades, pay at the middle and bottom of the wage distribution continues to be depressed. In addition, rising CEO pay does not actually reflect an increase in the value of CEOs’ contribution, but rather, their close ties with the shareholders who set their pay. This is not to mention that excess CEO pay also affects pay structures and helps generate pay increases for other high-level managers in the corporate and even non-profit spheres. Finally, since CEOs often wield enormous power and influence over the course of their career, they are able to take advantage of loopholes within the tax system in order to evade taxes.
In conclusion, after taking both perspectives into consideration, I think that even though CEOs are entitled to be paid more than ordinary employees, given the values they contribute to their organizations, the pay gap should be reined in so as not to exacerbate inequality. Additionally, it is of vital importance that radical reforms within the tax system be put in place in order to hold high-earning executives responsible for paying their fair share of income taxes.