Question: As noted in Chapter 12, the average compensation for a CEO of an S&P 500 company was $12.4 million, and CEO pay was 300 times

As noted in Chapter 12, the average compensation for a CEO of an S&P 500 company was $12.4 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. Trying to highlight this disparity the U.S. Securities and Exchange Commission (SEC) approved a rule in 2015 mandating that U.S. firms publicly disclose the gap between their CEO annual compensation and the median pay of the firms other employees. Thus far there is little evidence the rule has made an impact.

What are the potentially negative effects of this increasing disparity in CEO pay? Do you believe that current executive pay packages are justified? Why or why not?

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