Written By Introduction
UniCredit’s CEO Jean-Pierre Mustier recently announced that he will receive a 30% salary increase for the year. This announcement has sparked a heated debate on social media, with some people arguing that such an increase is unfair and unjustified while others see it as necessary to attract the best possible talent to UniCredit. In this article, we’ll explore the different perspectives of this divisive topic and analyze why each side holds their view. We’ll also discuss if CEO pay increases are in line with corporate governance standards and how shareholders can be sure such decisions are made in the best interests of all involved.
Details of the CEO’s pay rise
In 2016, the board of directors of Italian bank UniCredit approved a salary increase for CEO Federico Ghizzoni, raising his total compensation by 3.4% to €5.4 million. The Directors justified the raise based on Mr. Ghizzoni’s solid performance in steering UniCredit through a time of significant financial and political turmoil in Italy. However, not everyone agrees that Mr. Ghizzoni deserves a pay raise, given the bank’s weak financial performance in recent years.
What do you think? Is Mr. Ghizzoni deserving of a pay raise? Let us know in the comments below!
How UniCredit’s shareholders reacted
In light of the recent economic downturn, many shareholders of UniCredit were outraged to learn that the bank’s CEO was receiving a salary increase. Some even went so far as to call for his resignation.
However, it should be noted that the majority of UniCredit’s shareholders actually approved of the pay raise. This is likely due to the fact that, under his leadership, the bank has managed to avoid some of the worst effects of the recession.
It is clear that there is a divided opinion among UniCredit’s shareholders regarding this controversial decision. However, it seems that the majority are ultimately in support of their CEO and believe that he is deserving of a pay raise.
Other examples of high CEO pay
In 2017, the average CEO in the United States made 361 times the median salary of workers, according to a study by the Economic Policy Institute. In Canada, the ratio is even higher, at 419 times.
There are many examples of high CEO pay across different industries. For instance, in 2018, the CEO of Goldman Sachs made $24 million, while the median worker at the firm made just $865,000. Similarly, in 2017, the CEO of JPMorgan Chase & Co. took home $27 million while the median employee earned $76,000.
High CEO pay is often justified by reference to performance. For instance, it is argued that CEOs are paid more because they are responsible for driving company growth and increasing shareholder value. However, there is evidence to suggest that this justification is not always accurate.
For instance, a study by MSCI found that between 2007 and 2016, there was no correlation between CEO pay and total shareholder return (TSR) in the United States. This suggests that CEOs are not always being paid for performance.
The issue of high CEO pay is a controversial one and it often generates a lot of public debate. Some argue that CEOs are paid too much while others believe that they are worth every penny. What do you think?
The argument for high CEO pay
There are a few key arguments for why CEOs should be paid high salaries. Firstly, CEO pay is often justified based on the assumption that they are paid for results. In other words, a CEO who produces good results for their company should be handsomely rewarded financially. Secondly, it is argued that high CEO pay incentivises them to perform well and grow the company. Thirdly, CEOs are usually paid more than other employees because they have more responsibility and are often required to work long hours. Finally, it is worth noting that CEOs are not the only ones who receive high salaries; many investment bankers and hedge fund managers also earn millions of dollars per year.
The argument against high CEO pay
There are a number of arguments against high CEO pay. Firstly, it is often argued that high CEO pay is simply not justified – CEOs are not worth hundreds of times more than the average worker, and their salaries and bonuses should reflect this. Secondly, high CEO pay can be seen as contributing to social inequality, as the vast majority of people will never earn anything close to what CEOs earn. Finally, some argue that high CEO pay can lead to unethical behaviour, as CEOs may be tempted to take risks in order to boost their own pay packet.
Conclusion
In conclusion, the decision by UniCredit’s board to increase CEO Jean Pierre Mustier’s salary by a hefty 30% is one that has been met with much criticism and debate. While some argue that it is only fair for an executive of his caliber to receive such a reward for his hard work and successes, others contend that it sends out the wrong message in terms of corporate responsibility during times of financial difficulty. Ultimately, it remains to be seen how this contentious issue will play out but what we can all agree on is that the debate surrounding CEO pay needs to be discussed more openly and transparently if real reform is going to take place.
