In the workplace, all Chief Executive Officers (CEOs) have the fiduciary duty to reject excessive pay. Before reviewing the article How Much Compensation Can CEOs Permissibly Accept? I always believed that there is a standard structure that directs the compensation rates for all executive employees, including CEOs. However, the resource’s ideas have transformed my beliefs by revealing that the CEO’s fiduciary duties are moral-based and drive them to accept compensations that attract, retain, and motivate them to generate high revenue for the shareholders. Therefore, the CEO’s fiduciary duties limit the amount that they can accept as compensation based on the Minimum Effective Compensation (MEC) metric to fulfill their self-interests, achieve the goals of their companies, and satisfy their shareholders’ financial expectations.
For a long time, I have always thought that directors would never offer higher pay to CEOs than the stipulated amounts in their companies’ policies. Moreover, I was confident that CEO compensation was directly linked to the performance of the organizations. According to Rudin and Lee (2020), CEO compensation is associated with corporate reputation ratings only during economic recovery periods. However, Moriarty (2009) broadened my knowledge and encouraged me to view payment as a motivator for improved performance and increased productivity. I aspire to become a CEO in the future, which means that I should negotiate and accept compensation based on the MEC technique. The pay would encourage me to earn high profits for shareholders as opposed to prioritizing my interests above those of the company.
I realize that when the time for becoming a CEO approaches, I should abide by the fiduciary duty. The concept allows all CEOs to receive adequate pay that matches their work and motivates them to become productive while generating high revenues for their stakeholders. Conclusively, all CEOs should view the fiduciary duty as a moral rather than legal requirement and accept justified compensation as opposed to prioritizing their interests relative to those of their shareholders.
References
Moriarty, J. (2009). How much compensation can CEOs permissibly accept? Business Ethics Quarterly, 19(2), 235-250.
Rudin, J., & Lee, J. (2020). The impact of corporate reputation ratings on CEO compensation under diverse economic conditions. Corporate Reputation Review, 1-11.