Ethics and Ceo Pay

Topics: Corporate governance, Chief executive officer, Executive officer Pages: 4 (1395 words) Published: December 3, 2012

Leadership and Ethics of CEO Pay

Chief Executive Officer pay in the United States has risen dramatically. In the past three decades the salary of a CEO has risen significantly beyond what can be explained by variables such as firm, size, performance, and industry classification (Bebchuk & Grinstein, 2005). According to research, the CEO pay at the nation’s top 500 largest companies averages about $10.9 million a year. The CEOs are also receiving an additional $364,000 in perks. It was estimated that the average CEO makes 319 times more than the average worker in 2008 compared to a multiple of 42 in 1980((Anderson, Cavanagh, Kliner, & Stanton, 2005). CEO pay becomes an ethical issue when CEOs are compensated in excess for poor performance and when jobs of regular workers are downsized drastically but CEO pay is unaffected. The purpose of this paper is to discuss leader character, moral responsibility, and CEO pay. Leader Character and Moral Responsibility

The Leadership Character Model is an excellent model that discusses qualities that a great leader should possess. The leadership character model is a leadership theory developed in 2005 by Turknett Leadership Group. This model is an excellent prescription for a good leader and is described in terms of a pan-balanced scale. Integrity is the base and foundation of leadership according to this model. In addition to integrity, effective leadership is also a balance between respect and responsibility. Where respect exists, individuals feel a sense of partnership, equality, and fairness. When responsibility is established, each individual is willing to take initiative and act for the good of other and the organization (Turknett & Turknett, 2005). A leader’s character should be grounded in integrity. A leader should be honest and completely trustworthy. A leader with integrity doesn’t alter facts for...
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