ethics exercise "Do the right thing" chapter 12

What are the ethical implications of the following interpretations? 1. CEO pay should be determined by the marketplace, like it is with top professional athletes, musicians, and movie stars, and not subject to arbitrary limits by the government or stockholders. Top talent reguires top money. 2. CEO pay is definitely out of control. Corporate executives need to exercise some self-restraint when it comes to their compensation packages to avoid alienating their employees and customers. 3. CEO and executive pay should be tied to measurable performance. What dimensions of performance? 4. Your own ethical interpretation? matter how he parsed the numbers, Crystal discovered no relationship between shareholder returns and CEO compensation.... Crystal recommends awarding stock options with a strike price that's the average of the last 90 days and can't be exercised for five years to avoid "opportunistic" pricing. He also suggests reducing bonuses if incentive targets aren't met. [According to Crystal, average CEO pay in 2009 was $9.95 million, ranging from $128,751 to $43.2 million.] Dan Ariely, Duke University behavioral economist: CEOs care about stock value because that's how we measure them. If we want to change what they care about, we should change what we measure. Human beings adjust behavior based on the metrics they're held against. Anything you measure will impel a person to optimize his score on that metric. What you measure is what you'll get. Period.... To change CEO's behavior, we need to change the numbers we measure.... What are those numbers? Ideally, they'd vary by industry, situation, and mission, but here are a few obvious choices: How many new jobs have been created at your firm? How strong is your pipeline of new patents? How satisfied are your customers? Your employees? What's the level of trust in your company and brand? How much carbon dioxide do you emit? Sources: Excerpled and dala diawn firom Jessica SilverGreenberg and Alexis leondis, "How Much is a CEO Worthe* Bloomberg Businessweek (May 10-16, 2010) 70. Excerpled from Dan Ariely, You Are What You Measure, Harvard Business Review 88 (lune 2010) 38