Ceo compensation - remuneração de ceo (inglês)

Case Assignment: The debate over the CEO compensation

1 – CEO’s in the US (and that includes other nationality CEO’s running American firms) are definitely overpaid, the question is not if they are or not overpaid but how necessary is for the company sustainability and growth that they keep being overpaid.
From the market point of view including the shareholder’s point of view it is critical that the company increase its market value, measured by stock price appreciation. Therefore, it creates a sense of commitment for shareholders when CEO’s wages are related to company value. Relating the CEO compensation with the market value of the company has also effect on public opinion (like market analysts and reporters – appendix 1.) and that can affect stock prices as well. However, CEO’s are extremely well paid even thought the share of their incentives related to the performance of company does not go as expected. Indeed, CEO’s for most of large American corporations have fixed salaries high enough to sustain a way-above-the-average living standard and therefore, many CEO’s will perform their “best” (personal’s best can still be very low for the company needs) with or without the compensation related to the variable part of the incentives. This wealth effect of salary related to the CEO position itself can undermine the efforts of trying to incentive the executive to outperform or work more efficiently that he would do anyway.
A major problem about compensations is the unequally system in the workplace between CEO’s (and other top Executives’) and the rank-and-file employees’ compensations. The high discrepancy on salaries can create morale and efficiency problems on rank-and-file employees that would underperform in their jobs while feeling unfairness in the workplace. Thereafter it would compromise the company performance and the CEO performance as well.

2 – Comparing different cultural and market realities are not enough to prove that a CEO’s compensation is