4/07/2006

CEO's Salaries Tied to Profits

There has been much talk in the business world about CEO's salaries being too high even when profits are down. Is this ethical? Personally it doesn’t matter how much a CEO makes but when the profits are down, the CEO’s salary should also be down. The president of Ford, Bill Ford, is taking a 40 percent hit on his salary due to the fact that of losses. He says he will not regain his normal salary until the company makes a profit.

4 comments:

Brooke said...

I think a CEO's salary should be correlated with his/her company's performance. This has been a major controversy recently. Some CEOs have extremely inflated salaries, yet their companies continue to suffer one loss after another. On the other hand, we have CEOs like Steve Jobs. While he does pull down the hefty sum of $40 million per year, I think he deserves it. After being fired from Apple, he was asked to come back and he saved the company with the Ipod. Therefore, I think the CEO's salary should reflect the company's financial performance, for better or for worse.

Blake said...

As far as Ford's CEO taking a pay cut, I must say, I'M SHOCKED!! I'm also impressed that he, unlike so many CEO's of struggling companies, is aware of the situation and is taking proactive measures to improve things. Without a doubt, CEOs should be accountable for how their companies perform. While not every thing that happens to their company is within their control, the majority of the responsibiity should fall on them, as well as changes in their salaries in benefits when things are going well, or poorly.

zoe said...

I am glad to learn that Bill Ford is taking a cut in his salary, especially amidst the huge losses that his company has been facing. I think it is very important for a CEO to also suffer the ramifications if the company is not financially successful under their authority. Once the company is again profitable, I think the CEO does deserve a high salary. A large percentage of the CEO's salary should be based on the financial performance of the company they are running.

Bryce Larkin said...

I agree withI agree with everyone saying the CEO's compensation should be regulated if profits are down. I hope that CEOs can be an example for the unions also. Unions have a way of getting price increases but never taking a price decrease when times are hard. From them to reduce their price takes many negotiations and sometimes it can lead to strikes. everyone saying the CEO's compensation