CEO pay is financial
compensation received by an officer of a firm, often as a mixture
of salary, bonuses, shares of stock, benefits, insurance, etc. The amount of
pay is determined by the board of directors. For example, last year, AT&T’s CEO Edward Whitacre had a pay package worth
more than $38 million. That included $9.2 million in salary and bonus, $4.7
million in long-term incentive payouts and $24.8 million worth of long-term
incentive grants. Llyod Blankfein of Goldman Sachs pulled in all package of
compensation of $21.7 million in 2009 (source: MSN Money).There are some factors
that made the compensation differently among the CEOs.
Sales
Revenue
The
CEO salary gets higher when the sales/revenue also higher. One boss in US
company with annual sales $ 500 million get paid $ 2.16 million.
Type
of Company/ Sector
Rates of executive compensation are also high within the
financial, IT, telecommunication, oil and gas sectors.
Country
Rates of executive compensation are notably higher in
Western than Asian countries and it is reasonable to conclude that high rate of
executive compensation is primarily a Western phenomenon. In 2003, the Bank of
China CEO demonstrates the more modest rates of executive pay of $ 229,720,
while the Bank of America CEO got paid $ 9,959,080 (source: itcilo.org).
Gender
Based on survey
of 3,242 US and Canadian-based companies in 2008, the female CEO pay packages
are only about 85% of male total actual pay (which includes stock option profits
and other realized equity) at the median: $1,746,000 compared to $2,049,000
(source:businessweek.com).
Government
Control
China government put ‘caps’ upon level of executive pay in
various instances. In February 2009, the Chinese Ministry of Finance put a
limit upon the pay of executives at state institutions of 2.8 million Yuan ($410,000).
Rewarding Risk
Some argue it
makes sense that U.S. CEOs have greater potential rewards, because they accept
the risk of having a big chunk of their pay linked to options. The more risk
the job, the more they get the compensation.
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