From a personal perspective, CEO pay is excessively high in the current state of affairs. In relation to this issue, I take the position on the basis of socialist principles that presuppose relative equality in the distribution of income within society. At the same time, socialism-related equality and fairness do not refer to the unconditional equality of all individuals and the ignorance of their contribution in the process of distribution. Instead, socialism emphasizes the importance of equality of opportunity and fair reward on the basis of efforts (Cohen, 2009). In other words, people should not be divided on the basis of privileges as they should have a chance to reach particular positions by their knowledge, skills, and experience.
However, in a considerable number of companies, it is possible to observe the tendency of substantial inequality in wages. In other words, employees who do the majority of tasks, ensure the organization’s productivity, and contribute to the achievement of corporate goals have critically smaller salaries in comparison with CEOs whose visible performance is controversial (Holmberg & Schmitt, 2014). At the same time, there is no equality of opportunity – no matter how an employee works, he cannot achieve the same level of income. It goes without saying that increased CEO pay may be justified by specific processes within organizations that impact revenue distribution, and the equality of wages of a CEO and an ordinary worker is not discussed. Meanwhile, such a substantial inequality creates social and economic tension. In turn, more fair distribution of revenue could improve employees’ motivation, reduce turnover, raise job commitment, and enhance companies’ overall performance.
In turn, there is a counter-position that justifies excessively high CEO pay by an exclusive role and responsibility of a CEO. According to it, the organization’s performance directly depends on its CEO’s competence rather than individual performance (Holmberg & Schmitt, 2014). In addition, CEOs are liable to owners and have to consider their interests along with a company’s actual parameters and achievements. However, this viewpoint may be contradicted by CEO’s limited personal contribution and responsibility – thus, an organization’s success may be determined by external factors rather than the decisions of a CEO who, in turn, will not be financially responsible during economic challenges. In this case, the company’s pay scale may be based on Cohen’s socialism-related approach. It should consider every employee’s contribution and the role of a CEO which should presuppose an increase but not excessive pay.
References
Cohen, G. A. (2009). Why not socialism? Princeton University Press.
Holmberg, S., & Schmitt, M. (2014). The overpaid CEO. Democracy Journal, 60-72.