Are There Any Trends in Ceo Compensation

Introduction

Concerns have been raised not only by the investors and the economic scholars but also by the non-governmental firms and the general public about the practices around the compensation of the Chief Executive Officers (CEOs); such actions or practices are deemed excessive. It is evident that the compensation of the CEOs has increased radically from the 1980s. Unfortunately, this is occurring in contrast to the swelling inequalities in the distribution of capital in the OECD nations. This has resulted into varying degrees of reactions from investors and policymakers. In several nations, the legislators have come up with laws, which call for companies to carry out Say-on-Pay polls, announce the pay ratios between their CEOs and workers, or the maximum extras (Ferri, 2013). Social security funds have resorted to making use of their ownership rights to express their levels of dissatisfaction in relation to the excessive compensation that is accorded to the CEOs. With this in mind, my paper will focus on the trends that have been experienced in the compensation of the CEOs and the reasons associated to such occurrences or trends.

Trends in compensation of the CEOs

In the contemporary times, there has been a dramatic pay increase among the CEOs from all corners of the globe, in general and the industries in particular. For instance, the pay ratio between the CEO and the worker in the United States of America was at 42:1 in the year 1982. However, by 2012, the ratio had risen to 354:1(Kimbro, 2013). At the same time, the levels of inequality in the income distribution grew in number from the 1980s up to date. It is evident that the compensation of the CEOs has continued to surge making them earn more in overall off late.

Why the increase in compensation?

Several arguments have been put forward to clarify why there has been a vivid increase when it comes to compensation of the CEOs. One of the reasons put forward is the emergence of the global, which is...