4,8 million €. It is the amount of money that Maurice Lévy, CEO of Publicis Groupe (3rd communication group in the world), received as part of his annual compensation in 2012 . Only a part, as stock options and other bonuses were, of course, not considered in the calculation of this impressive salary. This is just an example of one of the top compensated CEOs today in France. Are this high wages justified? This debate causes many reactions, especially in a period of difficult economic and social context in developed countries. Whereas important CEOs are able to ask themselves where to spend their next holidays, most workers remain concerned by being able to pay their bills at the end of the month. This inequality leads us to reflection. In my opinion, this inequality is proportionally unjustified. Showing the huge gap between CEOs’ and workers’ average wage wouldn’t be enough to prove the irrelevancy in today’s top executives’ salary calculation. This is why I will introduce various concepts and go more deeply in the analysis of my point of view.

We should consider one of the principles usually used to justify CEOs’ compensation: the desert view. This concept emphasizes the fact that top executives deserve the money they make considering their competences, efforts and high responsibilities. It would be extremely hard to prove that a CEO sits at his position without having valuable business competences and experiences, especially as he is chosen by a board of administrators willing to enhance the company’s performances to answer shareholders’ expectations. The question of high responsibility is also difficult to deny as a CEO would be on the front line to face any problems relative to the management of the company, especially from a legal point of view, that could affect his career but also his personal life.

However, studies showed a clear gap between the CEO’s achievements and the performances of his company. Logically, compensations should be based on the executive’s achievements. Concretely, CEOs’ salaries are usually determined by the financial results of the company. This calculation is irrelevant if we consider the organization as a whole system which combines experienced managers, skilled workers and other competitive advantages. Considering the fact that the entire organization is responsible for its good results, the only competences and responsibilities supported by the CEO cannot explain his high compensation. Moreover, other features are not taken in to account in this calculation from a social point of view, the financial results avoiding the capacity of the CEO to improve work conditions for example. Finally, his individual contribution is difficult to distinguish from the one of its predecessor. Therefore it is complicated to justify his compensation by his individual performance.

Another interesting concept to consider is the incentives view. CEOs’ high compensations would be justified as their purpose is to attract, retain and motivate talented managers. An element can prove that this theory as irrelevant. We consider that high salaries are supposed to retain talented executives from going abroad. This fact is hard to believe. As an example, until today no foreign companies ever tried to attract a CEO positioned at the head of a top company in France . Even between French companies, it is really rare to observe a “transfer” of CEO from one to another.

Finally, most of the CEOs’ compensations are unjustified as they are in a position to set their own salaries. Indeed, boards of companies are often composed of leaders or former leaders who also benefited from the system. These salaries are fixed inside a closed room, where counter-power and objectivity has vanished, leaving the place to greed and capitalistic reasoning. As a concrete example, Lakshmi Mittal, CEO of Arcelor Mittal, increased his salary in 2012 (+1,8%) while closing factories in France, causing waves of unemployment.

Considering the high responsibilities and competences involved with the role of a CEO, the calculation of its compensation remains irrelevant, subjective and outside of the current economic and social context of most companies.