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    Ethics and Executive pay

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    What concerns have been raised ETHICALLY against executive pay?

    © BrainMass Inc. brainmass.com June 4, 2020, 5:23 am ad1c9bdddf

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    The inequalities in income caused by exorbitant executive pay raises an ethical concern. According to the Bureau of Labor Statistics, the median wage of workers increased by a modest 2.1% in 2010, while the median salary of CEOs increased by 27%. The average CEO earns approximately 200 times as much as the median worker's pay. This creates an income inequality that that shifts the value system unfairly in the favor of executives. Does the CEO do 200 times as much work as a typical worker?

    The money that is used to pay the executives comes from somewhere in the company. Several questions can be raised regarding the ethics of funneling the money to the executives. Is it ethical to eliminate health insurance for all workers in order to increase the executive's pay by a few million dollars? Is it ethical to pay lower dividends, or stop paying dividends entirely, to the investors who fronted the money to the company in the first place? In addition, lower-paid employees may feel slighted and resort to stealing from the company as a way to even out the ethics.

    A often-cited case of ethics (or the absence thereof) in executive pay is the case of Enron, a now-defunct company in the gas industry. Prior to 1990, Enron was a company with a long-term vision based on sound business principles. In the 1990s, its time-honored tradition of integrity changed. The executives at Enron created a new business paradigm based on their desire for higher profits, which would in turn lead to ...

    Solution Summary

    The concerns which have been raised ethically against executive pay is determined. The solution is answered in 855 words with seven references are cited.