Business Ethics
Please select one of the following topics to write about:
1. Should there be limits on corporate executive compensation?
In April 2011, Forbes magazine began its annual report on executive compensation with the following: “Our report on executive compensation will only fuel the outrage over corporate greed. In 2011, the chief executives of the 500 biggest companies in the U.S….got a collective pay raise of 16%, to $5.2 billion. This compares with a 3% pay raise for the average American worker. The total averages to $10.5 million apiece….So much for the moral suasion granted to shareholders last year with the first-ever say-on-pay votes for U.S. public companies” (Forbes, April 4, 2011).
Richard Grasso, former Chairman of the New York Stock Exchange, was given an enormous compensation package worth almost $140 million by the Board of Directors at the NYSE. His salary was determined by the employment contract he had signed with the NYSE board of directors. Grasso resigned in the face of public criticism of his pay package. He was also supposed to receive an additional $48 million which he was not paid initially, but he then was able to receive after filing a lawsuit. Most of the members of the board were personal friends of Grasso. He had appointed them to their positions and played a role in determining their pay. At the time, the NYSE was a nonprofit organization that regulated publicly traded companies. Those companies being regulated were ultimately the same companies that were paying Grasso his salary. This is far from an exception. Often a board of directors determines the CEO’s pay, but the CEO also has a role in determining their pay and deciding who will be appointed to the board and retained.
Michael Eisner was the CEO of Disney for 11 years and received total compensation of $570 million dollars. He now has an approximate net worth of $615 million. Did Eisner really ‘earn’ that money? Was his contribution to the success of Disney worth thousands of times the contribution of others to match that greater pay? What’s more, these CEOs often have very large severance packages (sometimes called ‘golden parachutes’) so that even if they run the company into the ground and get ousted as CEO they will still become exceptionally rich. In 2008 former CEO of AIG Martin Sullivan received a 47 million dollar severance package when he retired as the CEO even though the United States government was required to step in just a few months later to keep the company from going bankrupt.
In 1960 the after-tax pay for corporate executive officers (CEOs) was 12 times the average earned by factory workers. By 1974 it had risen to 35 times the average. By 1998 it had risen to 182. In 2012 it was estimated to be 231 to 1. The average CEO earns more in a day than the average American worker earns all year. Are such extremes just? Is this good for society? Is it good for the companies themselves?
2. Should there be laws that require a minimum wage, or ‘living wage’?
Make sure to consider all sides of the issue, including the economic issue, but not solely the economic issue. How do such policies affect society as a whole? Does it have better consequences overall, or worse? Is it simply a matter of fairness? If there should be a minimum wage, how should we decide where it should be set at? What is fair?
3. Ethical Oil?
In the fall of 2011, a Canadian organization called EthicalOil.org started a public-relations campaign aimed at countering criticism of commercial development of Canada’s oil sands. Extracting oil from these sands does immense environmental damage. EthicalOil.org seeks to counter such criticism by pointing out the alternative: choosing not to buy oil harvested from Canada is effectively choosing oil produced by non-democratic Middle-Eastern countries with very bad records of human rights abuses. What are the ethical trade-offs between the different choices? Which of them matter most to you and why?
• Imagine you have the choice, as a consumer, between buying gas for your car that comes from a country where oil extraction does vast environmental damage, and buying gas from a country where the profits from that oil help support a dictatorship with a history of human rights abuses. Which gas will you buy? Why? Are you willing to pay a bit extra to get oil that is more ethical, whatever that means to you?
• Imagine that you are responsible for securing a contract to provide gas for your company’s fleet of vehicles. If the choice is available to you, will you choose the most environmentally-friendly gas? Or the gas least associated with human rights abuses? Or will you just go with the cheapest gas available? Consider whether the choice between buying gas that harms the environment and gas that contributes to human rights abuses exhausts the alternatives in these scenarios. Are there other courses of action available to the individual car-owning consumer? To the manager responsible for procuring gas for the company fleet?
4. What is the social responsibility of business?
Is it only about making a profit? Do businesses have any other obligations to the community besides earning a profit? You can either argue for or against Milton Friedman’s position, or you can discuss the other models of social responsibility and explain which one you feel is best, and why.
5. What is the value of work?
Is work merely a means to an end? Can it be fulfilling in its own right? If so, do employers have an obligation to provide meaningful and fulfilling work for their employees? You can argue for which view of work you think is correct by providing additional arguments for that model, and/or showing why the other views are flawed.
6. Employment at will
According to our liassez-faire legal tradition, employment is ‘at will’ meaning that the contract exists only as long as both parties consent. Employees are free to quit their jobs at any time and for any reason, and employers are free to terminate an employee at any time and for any reason. According to the wording of the legal precedent, ‘all may dismiss their employee(s) at will, be they many or few, for good cause, for no cause, or even for cause morally wrong’ (Payne v. Western & A.A.R. Co., 1884). In more modern times this has been scaled back a bit so that there are some limitations on employment at will. For example, civil rights laws protect employees from being fired because of racial or sexual discrimination. Some argue that employee rights should be expanded so that employers can only fire an employee for ‘good cause’. Argue for the standard that you think would be appropriate concerning what the law should be.
7. Privacy
How much privacy should an employee have while at work? How about when they are off work, but using company property? What about during their free time, while not using company resources? For example, should a company be able to monitor and restrict what employees say on social media, even when those comments are not directly related to the employer?