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Extremely high CEO salaries lack moral justification

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Society & culture

It is difficult to justify extremely high CEO salaries. In addition, many of the moral reasons that should explain wage differences are far too vague. It shows a dissertation in practical philosophy from the University of Gothenburg. Ever since the financial crisis in 2008, there has been a debate about how CEOs are paid and about the so-called “bonus culture” in the financial world. Some critics say that top executives earn disproportionately more than the average worker. Others argue that it is not the sums themselves that are the problem, but that the financial compensation becomes an incentive for excessive risk-taking in the financial market. Still others say that the top executives have only achieved what is expected of them. Moral right to serve differently? – I have started with the question “What is a fair salary?”, Which several researchers in moral philosophy do, but I go more in depth. It is important to ask why it is morally acceptable for someone to earn more than someone else, says Alexander Andersson, author of the dissertation. He describes the most common ideas about wage setting. Most people probably think that pay gaps can be justified on fairly uncontroversial grounds. Those who contribute the most to the company and society can be said to earn more than others. Another idea is that wage differences are permissible if they are the result of a fair wage negotiation between fully informed and free parties. Wage disparities can also be incentives to increase the productivity and efficiency of employees, or be justified from an equality perspective where well-being or realization of life can be seen as the central currency, which does not necessarily require everyone to have equal income. Difficult to “calculate” fair salary – It is important to analyze these reasons for salary differences as they have been used to criticize and to defend high CEO salaries. But it is extremely complex to “calculate” what someone deserves in a certain sense, and salary negotiations between the CEO and the board often risk being anything but free and balanced. Previous research has also shown that incentive-based wage setting entails more risks than benefits – for example, that short-term thinking is prioritized over a sustainable business model in order to meet the criteria for a bonus payment. In other words, there also seem to be efficiency reasons that speak against extremely high CEO salaries. Are there reasons for high salaries Alexander Andersson also highlights reasons for very high salaries. In one of the articles, co-authored with Professor Joakim Sandberg, they argue that it can be rational for companies to pay high salaries when many other companies do.

Then you assume a comparative perspective, where the important thing is to get paid at least as much as everyone else instead of what you deserve in any absolute sense. More philosophical work is required – But my conclusion is that the extreme wage setting is difficult to justify, however, the question remains how large the wage differences should be from a moral perspective. The reason for the latter lies in the weakness and ambiguity of many of the moral reasons we usually give for pay differences. More philosophical work is required here, especially regarding the concept of earnings, in order to be able to say something precise about what is an appropriate wage setting, says Alexander Andersson.

His dissertation also shows that more interdisciplinary collaboration is needed.
– Economists need to incorporate more moral-philosophical thinking when they theorize about CEO salaries. And philosophers need to lift their heads from the books and see how well their theories can be applied to the “real world.” More contacts between the disciplines would definitely have benefited future research, says Alexander Andersson.

Dissertation: Giving Executives Their Due: Just Pay, Desert, and Equality Contact:

Alexander Andersson, Department of Philosophy, Linguistics and Theory of Science, University of Gothenburg, alexander.andersson@gu.se .

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