CEO compensation has always been a contentious issue, but it is never more so than when the company is struggling and failing to achieve expected results. Corporations are definitely going to find it tough going to maintain profit levels in situations where the economy if proving heavy going, or where there is a shift away from the products which the company manufactures to ones of a similar nature, but the CEO will always have some actions they can take to try to make the situation better. Workers do not like having to take pay cuts when the executives are still getting pay rises.
There have been serious changes in the way executive compensation has been dealt with, from the early days of exclusively monetary payments to the today when other kinds of compensation can actually be greater than the amount paid in cash. In the early days of the industry, when there were not many taxes and not a lot of regulation of major corporations, it was sensible for executives to be paid in the straight forward way, with direct cash payments. Companies looking to attract high-quality executives could pay a high cash reward and freely advertise it in the financial press.
There are always going to be people who would have a problem with the high salaries of executives, despite the fact those executives were bringing in unique expertise and enabling their corporations to go from negative to positive profit. These people have no inclination of the principle of being rewarded for effort and have in general been made redundant by the failure of communism in the East. Many people will be of the belief that executives are worth their pay, as long as they are able to deliver more value than they are receiving. There are not many workers, however, who will give backing to an executive who is taking high pay without producing results.
The nature of CEO compensation has changed little by little over the years since industrialization, this is mainly because of the growth of centralized government and changes in the levels of taxation. When taxes were comparably low, there was not much incentive in making the effort to develop compensation systems that were based on anything other than cash rewards. As the levels of taxation increased, there was every reason to try to discover types of compensation which would not be liable to penalties. In the initial years of expanding government, it was not a problem to pay in kind or to have alternative incentives which would not be taxable. This has become more and more difficult, as the central government continues to increase in size.
Essentially every CEO will be given the chance to buy stock in the corporation over which they control. These options should be accepted, as long as there are no clear reasons why the stock will decrease in value. The buying and selling of stock options must be publicly declared, and it is used as one of the most compelling indicators by traders in securities. If a company director is selling a huge percentage of their holdings, the market is certainly going to ask why. Extended selling, or selling in vast amounts, will produce a selling signal.
The nature of CEO compensation is not likely to change to any degree, whether the economic depression gets worse or recovers. The size of the central government is not going to be getting smaller, and the incentives which are allowed under the tax laws do not stand much chance of changing. Executives are likely to carry on receiving high cash rewards, but with a large percentage of their compensation in other ways. Every corporation will profit from giving their own products and services in compensation, and deals can usually be struck between companies to provide a better and more varied CEO compensation.