Ethics

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CEO-to-Worker Pay Ratios

1. Should the SEC mandate disclosure of pay ratios? Why or why not? And if so, how should the ratios be determined? The pay ratio provision requires publicly held companies to annually calculate the median total compensation for all employees globally, and disclose a ratio of the median employee’s compensation to the CEO’s compensation (H.R. Policy Association, n.d.). The SEC should mandate the disclosure of pay ratios because there are too many CEO’s collecting excessive salaries while their workers are making minimum wage. It is agreed that a general worker who has little experience as compared with a top executive with countless years of experience and education both fall into different pay brackets. However, the ratio between both salaries should not be too extreme. While a typical employee may take home their salary and hope of a 401-K, a CEO’s pay consists of their salary, a bonus, benefits, company stock, and growing pensions. This

2. What should the proper ratio be between CEO compensation and the pay of the average non-supervisory worker? Do you agree with Drucker’s 25-1 ratio? Why or why not? A proper pay ratio is one that is fair. I cannot accurately put a number to a proper pay ratio, but a CEO should understand that of the entire company is making money, then he makes money too. A person making a minimum wage can afford the bare necessities, and a slight bump can help the employee afford more, inadvertently helping the economy. A CEO making 25 times that of the employee would only use that bump for indulgences.

3. Ethically, do you agree with Drucker’s condemnation of excessive CEO compensation during layoffs as “morally unforgivable”? Why or why not? The question is how can CEO’s watch employees being laid off while they are being excessively compensated? This is a very unprincipled action by a CEO because in hindsight they are taking away a person’s ability to afford basic needs. It is therefore morally...
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