Are Compensation Plans For Private Sector CEOs In North America Reasonable?

Are Compensation plans for private sector CEOs in North America reasonable?
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Are Compensation plans for private sector CEOs in North America reasonable?
For many years, the question of whether Chief Executive Officers (CEOs) of major corporations in North America are overpaid has been an issue of great interest. In the last few years, the amount of bonuses and salaries that senior executives on Wall Street are paid every year has been in the news a lot, and the debate regarding levels of compensation for them has not showed any indications of subsiding. For many people, of particular interest is whether the government should regulate the pay for CEOs (Holmberg & Schmitt, 2014). This argumentative essay argues against the statement: Compensation plans for private sector CEOs in North America are reasonable?
The CEOs of many large firms in North America are generally overpaid. The compensation plans for these elite women and men are unfair, inappropriate and unreasonable. Crystal (2016) pointed out that in today’s age of ruthless cost-cutting and job losses across many organizations in the private sector, the salaries of CEOs in the United States and Canada are astronomically unreasonable. Chief executive officers do not just make lots of money in terms of raw numbers, but these individuals make lots of money compared with the workers outside the executive suite. Researchers have reported that the pay of chief executive officers compared with the pay of the average staff member has gone up over the last few decades from a level of 30 to 1 in the year 1970 to a level of 120 to 1 in 2000 and 347 to 1 today (Arenson, 2016). This is perpetuating the wage gap in North America between the haves and the have-nots, and it is clearly not reasonable. Furthermore, the financial services sector CEOs are paid more than the CEOs of non-financial services firms (Holmberg & Schmitt, 2014).
The pay for CEOs in North America, especially in Canada and the United States, is a lot higher compared to the pay for CEOs in similar-sized firms in Japan and Continental Europe. For example, the pay for Chevron’s CEO John Watson in 2012 was $18.1 million, which was a lot more than the $3 million earned by Christophe de Margerie who is the CEO of Total S.A, the French oil giant (Yglesias, 2013). In Canada, the Canadian Centre for Policy Alternatives reported that in the year 2015, the top 100 highest paid chief executive officers countrywide made $9.5 million on average annually (Kiladze, 2017). This pay was 193 times larger than the wage of the average industrial worker in Canada and was an increase of 30 percent from the year 2008 when the global financial crisis began (Kiladze, 2017).
Tom Hofstedter, the CEO of H&R REIT in Canada won the corporate governance lottery in 2016 when he along with his fellow executives were rewarded a batch of very lucrative stock options by the company’s board of directors, over and above the almost $80-million worth of stocks that he had already (Arenson, 2016). It is notable that in an ideal world, board members usually grant options at idealistic future prices as a way of rewarding the company’s senior executives for incre...