Are Ceo's Overpaid?

Colorado Technical University

Are CEO’s Overpaid?

Final Paper

Submitted in Partial Fulfillment of the Requirements for

Applied Managerial Finance

FINC-615

By

Martin Waters, 08B1246030

Denver, Colorado

September 2008

INTRODUCTION

In the wake of corporate scandals over this last decade an ever increasing amount of attention has been focused on Chief Executive Officer’s compensation. With base salaries averaging in the millions, stock option packages, company perks, annual bonuses, and a retirement plan a third world country could retire on it is easy to see why the general public, the media, and shareowners are asking “Are CEO’s Overpaid?” Most people think of CEO’s as being driven to work in a limousine only to work for a few hours, then back in the limo to the golf course for eighteen holes with their golfing buddies, after an hour long workout at their company-paid member’s only club they go to their mansions to spend time with their wife and kids.

To be fair this type of CEO is more than likely one who has years of tenure at his or her firm, produces better than expected results, has a board of directors who carefully monitors the company as a whole, and happy shareholders. CEO’s do not begin their career as a CEO straight out of college; it takes years of hard work and dedication to their understanding of how an organization operates. Once a CEO, then their life becomes nonstop working late nights/weekends, always available via Blackberry, cell phone, instant messaging and e-mail in case of an unexpected crisis. Since a chief executive is in the position of making consequential decisions affecting the entire corporation their heads are constantly on the chopping block. It does make sense their position pays more than any other in an organization but what is considered a fair amount of compensation.

I would hope to believe a fair compensation for the chief executive would be based on his or her results in regards to company...