Question: Executive compensation is a complex and controversial subject. Executive management skill has a direct impact on the success of the firm. Top executives should be

Executive compensation is a complex and controversial subject. Executive management skill has a direct impact on the success of the firm. Top executives should be paid multimillion dollar compensation packages; after all, if it weren’t for some effective CEOs, companies would not be making the millions of dollars of profits they make each year. They deserve a peace of the pie they helped create.

However, top executives have been criticized for being overpaid. In 2006, total direct compensation (including salary, bonus, and the value of restricted stock) for CEOs of 350 major companies was $6.05 million (not including generous pensions, deferred compensation, and other perks). Investors have been complaining about executive pay and trying to cut it back, without much success.

Is it ethical for managers to take large pay increases while laying off employees?

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