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In the 1950s, the salary gap between CEOs and workers was 20 times the salary of his/her average worker. Last year, the salary gap increased to an average of 361 times more than the salary of his/her average worker. CEOs receive most of the blame for the exorbitant executive compensation packages. However, several individuals participate in setting executive compensation such as: compensation consultants, compensation committees and board of directors.
The intended goal of executive compensation is to motivate management to accomplish business goals and strategies. However, there is very little correlation between CEO performance and high compensation. This leaves many asking: "Why has executive pay gone array?"
1. Summarize the role compensation consultants, compensation committees and board of directors have in determining executive pay.
2. Discuss the ethical components that need to be addressed for each group of individuals when determining executive pay.
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