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A Study on Justice in Compensation: The Justification of CEO Pay

  • PHILOSOPHY·THOUGHT·CULTURE
  • 2021, (37), pp.173~195
  • DOI : 10.33639/ptc.2021..37.008
  • Publisher : Research Institute for East-West Thought
  • Research Area : Humanities > Other Humanities
  • Received : October 27, 2021
  • Accepted : November 24, 2021
  • Published : November 30, 2021

WOONHYUK JANG 1

1동국대학교

Accredited

ABSTRACT

This paper analyzes the fairness of setting CEO's compensation from the perspective of 'Compensation in Justice' and tries to find the philosophical justification for the Minimum Effective Compensation (MEC). I begin with the concept of ‘fair reward’. That is, a company must pay wages in return for providing workers' labor, and the wages are set based on a fair criteria, and it requires that all stakeholders not be treated in a discriminatory way. For this, the three criteria for paychecks and its justification will be analyzed first from the point of view of Justice in Compensation. Second, it will be argued that the excessive compensation currently paid to CEOs cannot be justified by any of the above three criteria. Lastly, as a way to solve this problem, I would like to discuss the MEC that the CEO and directors, who are the main agents of a negotiation, should have. The MEC refers to the minimum wage needed to recruit and retain the most suitable CEO and to motivate that person to do his/her best. Proposing and accepting this is the fiduciary duty of distributing corporate profits and stakeholders, and it will be argued that this is the most appropriate compensatory definition for a market economy. Through the discussion of this compensation in justice, I expect that the social role of companies will be reconsidered and fairness in setting permissible wages for not only CEOs but also general workers will be accepted. This is because the distribution of economic resources through fair paychecks is not secondary to the national economy and corporate growth, but is the purpose of their existence. Moreover, wages should not be regarded as mere wages since workers provide for and receive work for the firm. This is because the wage plays a normative role that should be treated as a right to fulfill the expectations of one's own and family's livelihood and life, and to be faithful to the given task.

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This paper was written with support from the National Research Foundation of Korea.
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