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Should Corporations Cut CEO Bonuses in a Bad Economy?

European regulators have actively and vigorously cutting company bonuses in light of the current global economic recession. Although some government-related entities in the USA are being subjected to bonus caps, many are moving ahead with discretionary bonuses.

Your thoughts? Are these defensible in light of an economic recession? Or, are they important to attract and retain talent that will help companies quickly recover from the economic morass?

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The economic recession that continues to plague corporate America and the global economy has placed an increased interest on the topic of equality of CEO pay as compared to the overall performance of their company. In too many cases of late, the CEO is being fully compensated with massive bonuses and incentives tagged while their company is heading the other direction, losing millions, laying off workers, or being forced out of business. This would seem to most reasonable people to be unfair.

That being said, the CEO is the most important role a company has and there is a pattern of extremely high pay and bonuses that come with that responsibility. This isn't in and of ...

Solution Summary

The CEO is the most important role in a company, and there is a pattern of extremely high pay and bonuses that come with that responsibility. This isn't in and of itself the problem. Many people tend to hear the dollar amounts a CEO makes and scream for justice out of jealousy, not truly understanding all the dynamics of the CEO's pay and that leads to public outcry over perceived injustices, sometimes accurate, but in many cases the claims are purley false (Cheng, & Indjejikian, 2009).

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