Question: As noted in the chapter, the average compensation for a CEO of a Fortune 500 company was $14 million, and CEO pay was 300 times the average worker pay. This contrasts with historic values of between 25 and 40 times the average pay. In August 2015 the U.S. Securities and Exchange Commission (SEC) approved a rule mandating that U.S. firms publicly disclose the gap between their CEO annual compensation and the median pay of the firm's other employees.
a. What are the potentially negative effects of this large and increasing disparity in CEO pay?
b. Do you believe that current executive pay packages are justified? Why or why not?