High Paid CEOs Essay Example | Topics and Well Written Essays - 1000 words

High Paid CEOs - Essay Example Most of the CEOs get their pay with many components. These may include monthly salary, bonuses, stock options, and others. Quite often, when we look at the data regarding the compensation of CEOs, that data includes in itself the expected value of stock options, which is usually much higher than the current value and is set up the board of directors anticipating the performance of the company (Kay & Putten, pp. 59- 61, 2007). In addition, many CEOs have a considerable amount of their compensation in form of stock options and that is not liquid neither does the CEO walks away any morning with his stock options. Therefore, the liquid cash or variable salary that the CEOs receive is often much less than what we see and hear through various sources (The Economist, 2010). Most critics of the CEO pay often forget that like any other employee of the company, the pay of the CEO is decided by looking at his job description, the sensitivity of his job, the authority, task significance and the risk associated with it. Quite understandably, the job of a CEO is tricky and a risky one because history has witnessed revolutions in companies due to great CEOs and destruction of many companies as well due to incompetent. Besides, if we look this issue from the lens of a free market economist then this issue would cease to exist. These high salaries of CEOs are something, which the free market has come upon through market mechanisms and market driven forces (Beauchamp, Bowie & Arnold, pp. 158-159, 2008).