Spiraling in CEOs’ Pay and Michael Faber's Strategy

Engagement Assignment Summary: Spiraling in CEOs’ Pay
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Engagement Assignment Summary: Spiraling in CEOs’ Pay
Summary of the Issue
In 2018, the top 350 firms in the United States paid an average of $14.0 million to company CEOs, and according to reports, stock options comprised the largest percentage of their total pay package. Compared to an average worker, CEOs’ pay is relatively high with a ratio of 221:1. This trend has changed since 1978 when the ratio of the average pay of CEOs to that of a typical worker was 30:1, implying that there was a 940% increase in CEO compensation between 1978 and 2018. Contrary, an average worker’s wages only increased by 11.9 percent (Week 9: Executive Compensation). To understand the structure of executive compensation, the lecture discussed various components that comprise the CEOs’ pay, including salaries, short-term incentive bonuses, mid-term incentive plans, and long-term incentive plans (Week 9: Executive Compensation). The issue of executive compensation has raised debates since the Obama Administration with experts looking forward to radical changes to arrest the soaring compensations.
Summary of the article
The article from “Forbes” examines Michael Faber, the Danone CEO’s efforts to embrace environmental and social responsibility by changing the game in employee equity and corporate governance (Marquis, 2021). The author of the article notes that while low-wage employees struggled throughout the Covid-19 pandemic, CEOs had an increase in their paychecks of 16%, which led to the rise of S&P 500 CEO ...