PHIL 270 Lecture 16: BE 3.29 (L) CEO Pay and Sweatshops
4 May 2018
School
Department
Course
Professor
Business Ethics
3.29.17 Lecture Notes
Moriarty
· Three main views for justice and wages – these views also map onto moral philosophy
· Agreement view: just prices for goods are obtained through negotiations between informed buyers
and sellers
o Contractual view
o Whatever they come to, that is the just price
o What undermines the agreement view?
▪ Wh a’t e justif urret CEO pa?
▪ Market is imperfect
▪ Information problem – predicting performance for the future within a small pool of
candidates
• But that happens for any employee for any company
• More so, the lack of information between shareholders and what the CEO does
(his qualifications)
• Not just aout iforatio, it’s aout idepedee
• Board of directors do not have interest that is fully independent of the CEO (part
of the same social circles, etc.)
o Board of director may be the CEO of another company – raising another
CEO pay is raising your own indirectly
o Aaol does’t like the eplaatio – when there is inefficiency, there
will be information market that searches for talented people
▪ Owner of the business does not directly feel the pain or pleasure of the business (board
of directors); indirect
▪ Information asymmetry and lack of independence
o But, for all markets, there is always informational asymmetry
▪ So, we talk about relative informational asymmetry
o Why is the pool so small?
▪ Maybe the search firms are actually making the right decision because the pool for good
coaches or CEOs are just that small
▪ People are risk averse when they own large companies and are less willing to hire
inexperienced CEOs especially when the stakes are so high
▪ Perhaps the few examples of hiring outsiders and them driving the business to the
group creates powerful inductive tools
· Desert view: independent standards that how much people deserve from performing certain jobs
o Independent of what is agreed on
o Most common complaint – CEO pay goes up even if corporations do badly
o People the eliee that CEOs do’t desere it
o Similar to how politicians are blamed for the economy/praised when the economy does well
▪ Bill Clinton takes most of the credit for creating a government surplus – while Newt
Gingrich revolution caused Dems and Reps to hammer out good legislation + tech boom
– Clito did’t reall desere eerthig
▪ A lot of economic policies have lag that leak into the next administration
▪ Policy that spends a lot of debt – stimulates economy, but is horrible for the national
debt – but the politician with the policy gets a lot of praise for the bad policy
▪ Upshot: really complicated
find more resources at oneclass.com
find more resources at oneclass.com
