Ethical Ground On Executives Compensation
Yes, executive compensation is unethical. The current pay that most company CEOs receive is too excessive, and most people consider it outrageous. The fact that the executive gets excessive income is not by itself unethical. Still, the main concern is that an extensive gap in pay between the exclusive and workers makes it evil. Thus, income disparity is the primary ethical concern. Bebchuk & Fried (2014) points out that in more than 500 companies, CEOs earn more than 200 times the salary of average workers. This huge gap in income among individuals working in these companies indicates inequality and an act of irresponsibility among the executives.
The income disparity is an indication of the fact that the executives only care about themselves and their greed. They do not appreciate the hard work of the typical workers by offering them better payments in wages or salaries that are more equitable. The second issue that shows that the executive's high level of income is unethical is that salary scales are tailored to unfairness and greed. Their payment system is not dependent on performance like the case of other workers in the organization. Instead, their pay is tied to stock prices, and they will do all things possible to raise the stock prices so that they can benefit more.
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Payment revision can be in two ways to make it justified. The first is by making the price more equitable. There is no need for a large income disparity gap if the salary scale can be revised to fit all people's needs within the organization. It can be achieved by lowering the executives' pay to make it more equitable and at the same time raising the income of workers or by adjusting the salaries of both parties to reach a middle point. Doing these three strategies will bring about equity in payment.
Also, the criteria used to judge how much one has to be paid within the organization have to apply to all employees. To attain this, the government has a significant role in enforcing laws and regulations that govern wage payment within the workplace and ensuring that the price is equitable. The state legislature and policymakers can take the responsibility of enacting measures that address pay inequality between the executive and workers. The federal government can require complete transparency in wages for all contractors and workers. This kind of openness has been shown to reduce income disparity or gap among originations. The goal of such as policy is to address all employees who suffer in silence as they work hard but receive meager wages.
The Sarbanes-Oxley Act
The Sarbanes-Oxley Act is not strict enough. Though the act has helped restore proper accounting in public sectors' operations, there is still a significant gap in companies within the private sector. The best strategy would have been if this act would be also cover the private sector. The show has to cover this sector to deal with the unethical actions that have had a powerful tool in the entire economy and prevent public companies from being privatized to escape act compliance and other associated costs. Reforms of the Sarbanes-Oxley will cover issues relating to income disparities between the management and employees. I firmly believe that the Sarbanes-Oxley Act's requirements should apply equally between the private and public sectors. Private sectors should feel the pressure of this act's characteristics, unlike in selective areas, as is the case.
References
Bebchuk, L. A., & Fried, J. M. (2009). Pay without performance: The unfulfilled promise of executive compensation . Harvard University Press.
Mayhook, Z. (2019). Privately-Held Companies: Legislation, Regulation, and Limited Dissemination of Financial Information. DttP: Documents to the People , 47 (4), 28-33.
