What factors might contribute to what some perceive as unethical behavior concerning CEO pay? What are the differing ethical approaches, and how might they apply to this case?

CASE 13.1 CEO COMPENSATION: DO THEY DESERVE ROCK STAR PAY?

Anthony Smith, author of The Taboos of Leadership, noted,

The reality is that the free market is alive and well, and is the true dictator of CEO pay. While what one’s peers are making is still a legitimate barometer, critics should look at the macroeconomics of “stars” in all fields , and not just the micro economics of CEO pay, if they are serious about understanding the calculus in determining compensation.

Questions
How does ethics apply to this case?
What factors might contribute to what some perceive as unethical behavior concerning CEO pay?
What are the differing ethical approaches, and how might they apply to this case?
How might the issue of CEO compensation be dealt with in a firm’s code of ethics?
How might the issue of CEO compensation be used by a firm to create and maintain an ethical organization?
What is your own opinion about CEO compensation? Provide facts and arguments supporting your position from this case.
Case created by Herbert Sherman, PhD, and Theodore Vallas, Department of Management Sciences, School of Business Brooklyn Campus, Long Island University