The Pay of the CEO in the Organization

Further, the data collected was used to determine the amount the CEOs pay contributes to the organization’s rating. The data had several variables namely. pay, total, return rating and ratio. Regression analysis was carried out using STATA and the results follow.

According to David, K., and Ward, D. (2006), people tend to believe that CEOs are paid too much for what they do and for the services they provide. At the same time according to them, others believe that a CEO can have a positive effect on the performance of the organization and, therefore, high compensation is needed to attract the best talent (David, K. &amp. Ward, D. 2006).

Judging in which the CEO is overpaid or underpaid is a huge task (Gough, J 2000). Many articles as Gough, J (2000) focus on high CEO pay where they simply survey the executives who have or have been receiving the most overall money in a particular year.

In addition, many indirect perquisites of the various organizations are possibly not included in the final figures which are said to be the CEO’s pay. In stocks, for example, the CEO is allowed to buy the stock at a certain value later down the road (Macdonald, N 1999). To him, if the CEO makes the companies do well, then the price of the stock (for example) down the road can be much higher and the CEO could buy shares for his option price.

Defenders of high executive pay say that the global war for talent and the rise of private companies/firms can fairly explain much of the increase in executive pay (Beech, W 2001). For example, in Japan, a senior executive has very few alternatives for his/her current employer while in the United States, it is totally acceptable and even many admire this, for a senior executive to leave an organization to a competitor. either to a private firm (Carey, C 2002).

Many questions, therefore, arise as to whether. the figures reflect an efficient market or a failed one, whether&nbsp.the pay levels adequately disclosed, whether shareholders should have a more say and lastly, whether there are fairness and justice (Alan C. 2003).