In America, it is common knowledge that the general public’s opinion is that executive compensation is too high. Generally, we think CEO’s and other key positions in corporations are paid too high of a compensation for what they do. In China, this is a fairly recent discovery. However, the opinion is still the same. One executive in China actually makes $9.9million per year. On the other hand, in America, in 2009, the top ten paid executives were paid from $70 million to over $100 million.
One of the reasons for “overcompensation” of executives in America is stock. A lot of high-power executives are paid a lot of their salaries in stock to keep their interests aligned with the company’s interests. In this way, the executives can justify their pay.
In China, they are doing the same. The only difference is that the Chinese culture sees a major inequity with this, considering the low pay of the average Chinese worker. The average Chinese worker only makes about $3,500 per year.
Some people think the government should intervene and limit how much these executives can earn by setting a cap on how many shares of stock a CEO can own. The Chinese want to eliminate corporate duality in executives. Unfortunately, since there is a shortage of qualified individuals for corporate executive positions, this could deter them from performing as well as they would otherwise. The entire debate is still in its infancy in China. Though, I think I like the idea of limiting corporate ownership by executives in America. It would make for an interesting change.
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