Women’s Business Ethics Forum Luncheon: Is “Too Much” Ever “Not Enough” in Executive Pay?

By Tho Nguyen—Every six months, the Houston Women’s Business Ethics Forum along with Murray Hill Institute(Texas),  host Business Ethics Forums to discuss and develop philosophical and actionable frameworks for ethical and effective business management. In addition, the forums are designed to empower women to transform culture through strong and ethical leadership. On behalf of UST Cameron School of Business and Business Ethics Society, it was my pleasure to attend their biannual luncheon on Friday, November 4, 2016, During the meeting, I got a chance to listen and exchange ideas among a group of top women executives along with other professionals and business students within the area. This insightful experience has given me more information and support to be a positive influence; which raises my confidence in the significance of leading a business with grace and moral values.

Executive Pay – Is “Too Much” Ever “Not Enough” in Executive Pay?

The subject of discussion was how to ensure the CEO’s compensation package was both compelling as a retention tool and fair. Among the topics debated was the chief executive officers’ wages hike which significantly increased the difference between their compensation comparing to their average workers. This difference “is up from about 42 times the average compensation in 1980 and 15 to 20 times the average compensation in Japan and Germany today.” The ethical issues referred to how John Paulson jacked up his multibillion hedge fund by 340% after the subprime market in 2007. Lastly, we also discussed the ultimate end being served by a CEO as well as the possibility of a federal legislation to cap CEO compensation.

Leading while keeping Common Good in mind

The common opinion was that CEOs provide leadership through juggling multiple priorities to keep all the departments run smoothly as one entity. We also agreed that CEOs not only have responsibilities to their shareholders and employees, but also to their community. Our discussions emphasized on the importance of a company mission statement and culture, so that everyone can go back and refer to where that company is heading and how it will get there. Similarly, most of us agreed that CEOs should live by standards while holding true to their values and integrity. Some of us even brought up Arthur Andersen’s Enron scandal as a practical example of a company that went under having their values went against society standards.

Federal Cap – Yay or Nay?

We all agreed that a federal legislation cap would not be necessary in this case. However, there should be something in place if the companies cannot regulate themselves. For example, the extreme case of Mylan CEO’s compensation hiked after the Epipen price rose over 400%. Another question emerged from this discussion was who determined what would be reasonable pay for CEOs. Culture difference was another topic debated since this great pay gap between CEOs and their average workers seemed to be happened domestically comparing to other countries such as Japan and Germany. Overall, CEO should be compensated fairly for all the great business as well as ethical responsibilities they hold. On that note, they should lead with dignity and moral values to fulfill common good at the end of the day. As the forum concluded with Mr. James Hackett, former CEO of Anadarko Petroleum Corporation, responded to the case, a layoff should be the last resort for a solution when it comes to cutting costs; while CEO should consider taking a portion of his/her pay first.

Conclusion

I found the forum to be very inspiring when it comes to managing with values and ethics. The discussions highlighted that profits were not and should not be the only thing that matter to organizations. Success would come to those firms who work diligently toward the continuous growth of the community along with their own. These types of initiatives would create an evolution for a whole new generation of companies that would contribute to our society. I look forward to attending other Business Ethics Forums in the near future.

Tho Nguyen

MBA Candidate in Accounting and Finance

Share this Post