1.   Based on the data presented in the figure, how would you explain the large differential in CEO pay ratios between the United States and other countries? Are these differentials justified? Explain.

2. Some people argue that U.S. executives are paid more because the “going rate” in the U.S. marketplace is a lot higher than that in other countries. An American firm has little choice but to pay the domestic market rate to executives, otherwise the best executives would migrate to competitors. Furthermore, the key objective is not to attain greater compensation equality, but rather to maximize the profitability for the entire organization, which in the end benefits everyone. Do you agree or disagree? Explain. 

y amount decided upon. This experiential exercise involves a group of six students. One will be a manager and five will be part of a team that has Global Case 3 YOU MANAGE IT! 2. Some people argue that U.S. executives are paid more because the "going rate" in the U.S. marketplace is a lot higher than that in other countries. An American firm has little choice but to pay the domestic market rate to execu- tives, otherwise the best executives would migrate to com- petitors. Furthermore, the key objective is not to attain greater compensation equality, but rather to maximize the profitability of the entire organization, which in the end benefits Are American CEOS That Much Better? According to a study by a leading consulting firm, at compa- nies with sales of at least $35 billion, on average, U.S. and European chiefs earn salaries and bonuses of $24 million. However, American CEOS receive far more in stock and stock options. The end result is that "in the U.S. the imperial CEO still takes the lion's share."a Another study presents more striking data that shows that compensation inequality between the CEO and the rest of the organization is far in the United States.b The authors of that study suggest that European companies tend to spread wealth more evenly among employees and that the pay differentials observed in the United States would not be "socially tolerated" in Europe. Figure 8 shows CEO pay as a ratio of average employee earn- ings in a number of different countries. everyone. Do you agree or disagree? Explain. 3. Do you think that most employees care or even think about how much the firm's CEO makes? Considering that CEO pay is a tiny fraction of the total operating cost in most organizations, why is there so much fuss about CEO pay? Explain. greater Team Exercise Class is divided into teams of five. Some teams are asked to Critical Thinking Questions 1. Based on the data presented in the figure, how would you explain the large differential in CEO pay ratios between the United States and other countries? Are these differen- defend the position that CEOS receive what they deserve; other teams are asked to argue that CEOS are overpaid. After each team meets for approximately 15 minutes both sides will then discuss their respective position in class, with the instructor acting as a moderator. tials justified? Explain. Total CEO Pay in Large Firms as a Multiple of Average Hourly Paid Employees' Earnings in Large Firms: A Selected Country Comparison Figure 8 CEO Pay as Ratio of Average Employee Earnings Country United States 531 United Kingdom 25 Netherlands 22 Belgium Italy Spain France 19 19 18 16 Germany 1 190