Michael Bruno is a senior level manager for Company XYZ. He has been with this organization for 25 years. Michael is in charge of recruiting a new CEO for Company XYZ because the previous CEO, who had a “golden parachute,” was terminated for tolerating low performers, mismanaging change, and ignoring customers. After posting the position on LinkedIn, he received a number of inquiries from potential candidates. After spending months interviewing both internal and external candidates, Michael has two potential candidates (i.e., Doug Wilson and John Smithson) for the CEO position. After having the final round of interviews and spending the day with each candidate, the hiring committee selects John Smithson for the CEO position.
Michael decides to have a meeting with his team to discuss the CEO’s salary before sending John’s employment contract. Michael believes that the CEO of a company should make at least 10 times more than the highest paid employee. Several of his colleagues reject his idea and argue that the CEO should make significantly less. One person yells out, “What about the employees—the employees of the organization should all receive a raise that is well overdue.” Michael is perplexed and decides to have a follow-up meeting with his group first thing in the morning.
Some specific articles on this topic to get you started:
Taylor, M. (2009). Super CEO salaries on the rise. Super Review. Available in the Trident Online Library.
Mongan, E. (2017). Multi-facility CEO salaries on the rise. McKnight’s Long – Term Care News, 38(4), 4. Available in the Trident Online Library.
Peterson, A. (2015). If reddit wants to fight the gender pay gap, it should disclose everyone’s salaries. Washington: WP Company LLC d/b/a The Washington Post. Available in the Trident Online Library.
David Wighton in, N. Y. (2007). Goldman sachs CEO nets $68.5m salary. FT.Com, 1. Available in the Trident Online Library.
Once you have finished reading about this topic and reviewing the background materials, please write a 2- to 3-page paper (either in essay format or Q & A format) addressing the following questions:
- Should a CEO of a large organization earn at least 10 times more than the highest paid employee? Justify your response.
- Should Michael Bruno try to low-ball John Smithson so he can also provide a small raise to all of the employees of Company XYZ? Justify your response.
- What resources can Michael Bruno use to learn more about CEO salaries?
- Should Company XYZ have a salary cap for CEOs? What are the pros and cons to having a salary cap?
- Should CEOs have a golden parachute?
- Based upon your research and beliefs, discuss a fair policy for a CEO’s salary so there is no confusion among the employees.