Whether there is any relationship between the executive compensation and the equity theory and what is a “fair” level of pay for top executives. Case Summary: The case is about the pay gap between the CEO and the typical workers. Most of the people from almost countries think that higher employees like CEO, cabinet ministers etc should be paid less according to a research. In United States the average CEO is paid 354 times what the lowest-ranking employees get, for a ratio of 354:1. 30:1 is the estimation stated by the people of United States whereas it is around 18:1 by the people of Germany. However in reality it is 354:1 for the country United States and 151:1 for the country Germany. The difference in the pay between the CEO and the workers has made the people unhappy and de-motivated. According to them, they believe that the skilled workers should earn more than the unskilled workers. Adequate Information: For all countries worldwide in the study, participants universally believe that CEO’s are overpaid as the estimated ratios were above the ideal ratios.

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Chapter 7, Problem 14CR

Summary Introduction

To Determine:

Whether there is any relationship between the executive compensation and the equity theory and what is a “fair” level of pay for top executives.

Case Summary: The case is about the pay gap between the CEO and the typical workers. Most of the people from almost countries think that higher employees like CEO, cabinet ministers etc should be paid less according to a research. In United States the average CEO is paid 354 times what the lowest-ranking employees get, for a ratio of 354:1.

30:1 is the estimation stated by the people of United States whereas it is around 18:1 by the people of Germany. However in reality it is 354:1 for the country United States and 151:1 for the country Germany. The difference in the pay between the CEO and the workers has made the people unhappy and de-motivated. According to them, they believe that the skilled workers should earn more than the unskilled workers.

Adequate Information: For all countries worldwide in the study, participants universally believe that CEO’s are overpaid as the estimated ratios were above the ideal ratios.

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