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and to a lesser extent in a number of other countries.
Observers differ as to whether this rise is a natural and beneficial result of competition for scarce business talent that can add greatly to stockholder value in large companies, or a socially harmful phenomenon brought about by social and political changes that have given executives greater control over their own pay.
Executives are also compensated with restricted stock, which is stock given to an executive that cannot be sold until certain conditions are met and has the same value as the market price of the stock at the time of grant.
The vesting term refers to the period of time before the recipient has the right to transfer shares and realize value. For example, a CEO might get 1 million in cash, and 1 million in company shares (and share buy options used).
Executive stock option pay rose dramatically in the United States after scholarly support from University of Chicago educated Professors Michael C. Supporters of stock options say they align the interests of CEOs to those of shareholders, since options are valuable only if the stock price remains above the option's strike price.
Stock options are now counted as a corporate expense (non-cash), which impacts a company's income statement and makes the distribution of options more transparent to shareholders.
In 2007, the world's highest paid chief executive officers and chief financial officers were American. has the world's highest CEO's compensation relative to manufacturing production workers. "Today the idea that huge paychecks are part of a beneficial system in which executives are given an incentive to perform well has become something of a sick joke.
They made 400 times more than average workers—a gap 20 times bigger than it was in 1965. A 2001 article in Fortune, "The Great CEO Pay Heist" encapsulated the cynicism: You might have expected it to go like this: The stock isn't moving, so the CEO shouldn't be rewarded.