Salaries: How Much is Too Much?

by Vault Careers | November 19, 2010

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The issue of pay is never far from the headlines in this day and age, with the focus almost inevitably falling on whether top earners' salaries are justified. Just this week, for example, the Wall Street Journal published its list of the year's top 10 highest paid CEOs, which gave rise to a predictably polarized debate over in the comments section between those who believe such salaries to be excessive and those who consider even the idea of limits to be a form of communism.

As usual, such debates hinge on the notion of "rewarding performance"—the theory being that top performers deserve higher incomes. It's difficult to argue with that: the concept goes to the very heart of capitalism.

But as we've already seen this week, there's evidence to suggest that higher incentives can actually have an inverse effect on performance—the bigger the potential rewards, the higher the risks people are willing to take to achieve them. And, in case you've forgotten some of the lessons of the past couple of years, risky behavior doesn't always pay off.

So there's clearly room for debate on the issue of rewarding performance. Which is where you come in: we'd love to hear any thoughts on what an ideal salary/reward package would look like. Do you have a problem with some of the pay packages being bandied around now or is it all overblown hype? Should companies be free to remunerate employees however they choose, or should corporate governance be subject to governmental oversight? And if there is such a thing as too much pay, where do you draw that line?

Give us your suggestions in the comments field below.

--Phil Stott, Vault.com

Filed Under: Salary & Benefits

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