Through the last few decades, no issue has been more contentious within the United States as wealth inequality. Some of the most visible aspects of this problem, as some would describe it, is the incredibly disproportionate amount of money that certain CEOs take home each year. Historically, prior to the year 1970 or so, most CEOs only earned modest multiples of their typical workers. Multiples of 30 to 40 times the take-home pay of the average worker were typical of what CEOs in the United States made.
However today, many CEOs make grotesque multiples of their average workers. Multiples of 500 times or even more are not uncommon today. Many view this as inherently wrong and somehow morally corrupt. But these are very complex questions. There are strong arguments on the other side as well. Many point to the highly productive nature of many CEOs and their tangible contributions both to shareholders and the companies themselves.
One poster child for this viewpoint is Tony Petrello. Petrello took much slack in 2013 for his $1 million in total compensation that he got from Nabors Industries. Many critics pointed to this as being a grotesquely disproportionate compensation package, based on nothing more than the number itself.
But this obscures the dramatic accomplishments that Petrello had to his name. After becoming CEO in 2011, Petrello oversaw a nearly 200 percent increase in the stock price of the company. His large compensation was a straightforward consequence of the way in which his executive compensation was defined. Being tied to the stock price, and actually led to a large increase in his compensation for the year 2013.
But even this obscures the many vast accomplishments that Petrello was able to achieve during his tenure as chief operating officer. In fact, the company essentially owed its existence to this one man. Without his vision and leadership, the company would have certainly never exited from chapter 11, being liquidated and ultimately shut down.
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