Chief Ethics Officers
Chief Ethics Officers (CEOs) may not have been very popular around a decade ago, but the demand for such a position is beginning to grow within larger companies. From this point forward, when I mention CEOs in this paper, please understand that I am referring to Chief Ethics officers and not Chief Executive Officers. CEOs began appearing in corporate America around the same time as the inception of the Federal Sentencing Guidelines for corporations. According to these guidelines, the companies who have instituted compliance and ethics programs within their institutions wouldn’t have received as severe a punishment as those without the programs in place.
Salary.com conducted a survey with the Ethics Officer Association (EOA) in August of 2005 that further brought to light the growing demand for CEOs. Over 109 of the largest companies in the world were part of this survey. “Given the increasing importance being placed on corporate ethics and compliance, Salary.com's analysis of the survey has shown that top ethics executives are receiving salaries comparable to that of a Chief Information Officer and significant amounts of long-term incentives (non-qualified stock options, incentive stock options, and restricted stock).”
Mostly due to the large scandals in the late 1990s and early 2000s, like the Enron epidemic, most larger companies want to avoid any disasters that might even duarf in comparison to what we have seen in the past. Another powerful driving force behind CEOs’ popularity was the inception of the 2002 Sarbanes-Oxley Act, this act established new standards for corporate accountability in America. Requiring companies to not only make stronger commitments to ethical standards, but to enforce the punishment of those who break them. As a result, the compensation for the largest global ethics and compliance executives is nearly $750, 000. All of these of these officers have obtained at least a masters degree. This trend seems to be in even greater demand as of mid 2005, reports of EOA membership statistics doubled from just 5 years prior.
In 2003 Nortel Networks, a Candian telecom giant, hired Susan Shepard as the new chief ethics and compliance officer. Her enlistment came with a pretty large annual salary and bonus. Shepard would receive a $375,000 salary and a bonus of 60% of her base pay, respectively tied into the company’s balance sheet. Many people complained regarding her bonus structure. They didn’t think that she should receive additional funds based on the success of the company. Mostly due to the history associated with corruption within Nortel, these objectors just wanted to keep the ethics officer “honest”. Others argued that Shepard was a part of the management team and thus should be rewarded for the company’s success.
Kieth Darcey, the executive director of the US Ethics Officer Association stated that ”The risk of doing business has never been...