The Outrageous Sums And Benefit Packages That Go To The Ceos Of Health Care Industry

An ethical issue concerning multimillion dollar

Compensation packages received by health industry CEOs

The article "Nothing Succeeds Like Exce$$" discusses the outrageous sums and benefit packages that go to the CEOs of health care industry while millions of people suffer and thousands of hospitals do not have the resources to provide health services to the needy. It further discusses if compensation committees and boards of directors are overcompensating corporate officers? Article explains the difference between executive's salary and bonus to revile the uneven distribution of available resources in the industry. Questions are raised if we can afford to reward so few so abundantly? While, the majority of those who are involved in this industry, and the patients are bearing the burden by not receiving the benefits they deserve.

In the United States, 44 million Americans lack health insurance. Those with insurance are facing increasing rates and co-payments. The elderly are forced to make painful choices between food and drugs just to keep them selves alive. ERs are facing staff shortages and have to turn away patients. At the same time, the chief executive officers and chairmen of the largest health care corporations are building phenomenal income and wealth.

The combined value of total compensation received by 43 CEOs in the study for the last year was $669,453,450 and each executive averaged $15,568,685 in a year. Base salaries are the key component of executive employment contracts. Most elements of compensation are measured relative to base salary levels: Target bonuses are usually expressed as a percentage of base salary, as well as option grants are expressed as a multiple of base salary. Each increase in base salary contributes to an increase in other compensation components. Target bonuses are rewarded for meeting financial and non-financial goals that are relatively simple to obtain. These bonuses have become a mandatory portion of the compensation package. Other benefits include stock options designed in a way that if the market price increases, then the executive receives a hefty profit. If the stock price declines, the CEO loses nothing. The recent economic downturn has led to new trend in the stock options where stocks are re-priced or the old options are canceled reissued with a lower exercise price.

Annual base salary close to million, with bonuses, stocks, and stock options in the millions more are supposed to motivate CEOs to work harder. But according to the study done by Graef Crystal there is little evidence of a difference in motivation with these exorbitant compensation packages.

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