Saturday, September 15, 2012

Debate on Executive Pay

While Warren Buffett argues that CEO pay is inflated due to unchecked egos, a recent article in The Economist argues that CEO pay is a bargain.
The Economist (9-8-2012) "Bargain bosses: American chief executives are not overpaid''

For more evidence that CEO pay is not correlated with performance, read
The Economist (2-7-2012) "Executive pay and performance"

Thanks to Dodd-Frank financial reforms, firms are now required to disclose the gap between CEO pay and the median salary of employees.
WSJ (6-26-2012) "Firms Resist New Pay-Equity Rules"

Questions for Students:
1. What other sources can you find to contribute to the debate?
2. How do you think CEO salaries should be determined?

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