Comparison of Us Ceos and Ceos in Other Industrial Countries

Only available on StudyMode
  • Download(s) : 75
  • Published : February 20, 2013
Open Document
Text Preview
Nowadays, more and more people question whether US CEOs are overpaid compared to CEOs in other industrial countries or if they are paid fairly and deserve a larger share of the wealth they helped their companies earn. With the development of a global capitalist economy, laborers pay in the free market is increasing continuously. However, CEO pay increase is not in alignment with the average US worker’s pay increase, as Garofalo pointed out, “In 2011, US CEOs in the Fortune 500 made an average of $12 million, about 380 times what the average worker makes. This number increased from 343 times in 2010” (Garofalo, “Average Fortune”). When we compare the U.S CEO-to-worker ratio with other countries, the result is more shocking: In Japan, the CEO-to-worker ratio is 11:1; in Germany, 12:1; in Canada, 20:1, respectively. However, the U.S ratio approaches to 475:1 (Tampa bay Times). Are U.S CEOs really paid based on their actual performance? The answer is no. For example, from the article named “Introduction of GM”, the whole sale of GM decreased by 23% in 2008. However, GM’s CEO pay was as much as 200 times what a common worker would have; while at Toyota, it was only about a twentieth of what a worker earned (Yglesias, “Comparative CEO Salaries”). In 2008, GM’s CEO had $14.4 million in compensation, but the pay of Toyota’s CEO was under $1 million in the same period (Joules, “News vine”). Another example is William Weldon, the CEO of Johnson & Johnson. In 2011, “J&J has been battered by 22 product recalls in 19 months because of the quality issues” (McIntyre, “American’s most overpaid”). The net earnings of J&J went down from 13.3 million in 2010 to 9.7 million in 2011. However, William Weldon still earned approximately 26 million in 2011, almost the same amount as his previous year (“JNJ| Income statement”). Some people believe that U.S CEOs are not overpaid, especially the good CEOs such as Steve Jobs. When Jobs returned to Apple as an interim CEO in 1998,...
tracking img