Executive Compensation Executive compensation is a complex and controversial subject. On one side of the debate, executive management skill has a direct impact on the success of the firm. Top executives should be paid multimillion-dollar compensation packages; after all, if it weren't for some effective CEOs, companies would not be making the millions of dollars of profits they make each year. They deserve a piece of the pie they helped create. 97 On the other side, top executives have been criticized for being overpaid, especially as CEO pay rose while employees were getting laid off during the recession. In 2010, the economic recovery remained frail, unemployment was high, and corporate profits were roughly flat, up 1.5 percent from where the stock market peaked. However, CEO compensation jumped 27 percent in 2010 as employees pay went up only 2.1 percent. The median pay in 2010 was $9 million. Philippe Dauman of Viacom was the highest paid with total compensation of $84.5 million, followed by Ray Irani of Occidental Petroleum with $76.1 million, and Michael White of DirectTV was third with $32.9 million in compensation. 98
1. Do executives deserve to make around 200 times as much as the average worker?
2. Is it ethical for managers to take large pay increases while laying off employees and when giving them only small raises?
3. Are companies being socially responsible when paying executives premium compensation?