Study Questions
On Executive Pay
Ira T. Kay, a businessperson and author, defends current CEO
pay practices. What arguments does he give to justify the current levels of
executive pay? (He gives several arguments.) According to Kay, why are CEOs
worth the money?
Edgar Woolard, Jr., former CEO and chairman of Dupont
describes four myths regarding the compensation received by corporate CEOs.
What are these so-called myths, and what are the arguments he gives that CEOs
are paid too much?
Are CEOs paid in proportion to their productivity? Do changes
in their compensation closely follow their companies' profitability to their
shareholders, or do CEOs typically get higher wages regardless of their
performance? How are typical CEO compensation packages structured? If it
helps, think in terms of the examples we looked at of CEOs of leading
financial firms who recently needed bailouts from the federal government.
After discussing Issue 2 (Kay vs. Woolard) from your textbook), your professor argued that regardless of who is right, Kay offers a technically stronger argument. What is the basis for that argument? Characterize the nature of their arguments and explain why Kay's might be harder to refute.