I noticed that the graph on page 1 is logarithmic and inflation adjusted. Just about anything that could ethically be done to lessen the peaks. Go to a linear scale and do not use inflation adjusted dollars and it becomes even more depressing.
@krisi. I am not advocating for a reduction in CEO pay - in fact, I am against it as I mentioned earlier. Maybe the phrase "flatten the pyramid" is a bit misleading. What I indeed meant is, pushing up the base of the pyramid, creating some compensation traction that prevents a segment of the pyramid from breaking away and leaving the rest behind.
And a CEO that controls the HR in order to gain advantage at the expense of the rest of the company is not fit to be a CEO either.
It should be said to such a CEO - what's happened to your preachings about 360 feedback, what's happened to your mantra about the virtues of good leadership? ...
If you want to make more money, then you shall do it carrying the rest of the company along ...
HR listens to CEO...nothing will get done, I guarantee it...there are very few CEOs that wants to make less money...and if you have characetristics like this in you that probably disqualifies you as CEO ;-)
I agree it is easier said than done. However I do think each organisation will have to address the issue by being transparent about compensation ratios within the company. This responsibility could lie within the HR unit.
I think the best solution is to find ways to flatten the compensation pyramid. I do not necessarily believe that CEOs are overpaid just by looking at absolute figures. What I would like to see is a reduction in the CEO to employee compensation ratio.
I do not believe in caps. If at all, its the ratio that should be capped so that no one group pulls away, or another left behind.
BurtB, there is more than one way of looking at the current situation, whether or not you decide to listen to the AFL-CIO. I can tell that right now you're probably employed because you'd have a little different perspective if you weren't. You also need to understand that there are various reasons some of us didn't happen to be employed back in '08 or whenever when in this pathetic game of musical chairs "the music stopped" and anyone who wasn't employed had to start competing with imported labor and their miniscule wages in order to become employed. See you're still "lucky enough" (not really, I'll get to that in a moment) to think of your employment in terms of you providing value to the corporation you work for in excess of that amount. There are a lot of us who USED to think in those terms before our bosses got it into their collective heads that in all likelihood you really AREN'T worth THAT much more than the $2 or $3 or $4 an hour that they'd have to pay to employ someone offshore to replace you, or the minimum wage they'd have to pay to bring someone over here on an H1B visa. (Or maybe you work for a defense contractor where their numbers aren't all that important, and/or they may not be able to employ a non-citizen for security reasons.) Now if we get to the point about "what value does the CEO provide for his salary" I presume you'd be just FINE with him replacing you tomorrow and adding a good portion of the "money he saved the corporation" to HIS compensation? Oh you're not? Well then how is he SUPPOSED to be compensated again? Hmmm...
As to why you're not really "lucky" to still be employed, what I'm saying is you'll be absolutely SHOCKED how long you'll STAY that way if you're on the street without work for more than something like three months or so, they'll put your name on the list with all the other "unemployables". THEN you'll understand what the rest of us are so doggone upset about! Oh yeah, now what is the TRUE ratio of a CEO's salary to that of his average offshore employee? I haven't seen anyone even TRY to calculate that one!
People seem to forget that The question is not "Fairness" as the AFL/CIO has would have you believe.
That there are CEO's that get pay raises when their company loses money is the real problem, not that they make more money than another employee of the company .
The Question should be "does this person contribute to the profitability of the company".
Kobe Bryant makes 61Mil, not because someone wants to stick it to the hot dog vendor, but because Kobe puts people in the seats by helping the team win.
When he stops contributing to the success of the team, he will no longer recieve his huge salary.
Engineers need to rember that their salary is a function of how much money they allow the company to make or save. Does the job need to be done? Can they get someone cheaper to do it? How much is your experience really worth? It is up to The engineer to make the case that his knowledge, skill and experience is worth more than an recent Engineering grad, an H1-b visa, or next illegal immigrant.
Rather than crony capitalism, as the President of the AFL/CIO (whose salary and benefits are stated as
who knows what under the table trips and meals he actually gets)
the salary of a CEO should be directly tied to profit he generates for the share holders.
Thank you @otta...the difference between Switzerland US is smaller than I thought...the problmem with the Swiss porposal was that it was going too far...12:1 ration is not realistic...I would be happy with 30:1 which will compress the problem in US by an order of magnitude...perhaps we coudl poll EE Times readers whah they think the fair ration is! Kris
Ratio to average salary in Switzerland is 148 and in US is 354. Data are after AFL-CIO. Group difficult to suspect of much sympathy for CEO's. Also, average pay of Swiss CEO was $7.4 mln and US CEO $12.3 . Yes, it is difference but much lower than someone may expect. I mean Swiss voters have almost the same reason as (potential) american voters, to cap CEO compensations.
Personally I don't see how (especially when implemented as rule of OECD) resonable cap of CEO salary (as multiplication of average employee salary) can negatively impact economy! Actually I think it would be positive impact. CEO would have personal interest in raising employes salaries but in same time would be responsible to shareholders and have to guarantee company growth. That is exactly what society expect from that group.
Currently main problems are lack of decency, cult of celebrities and money grab and run mentality.
There would be many ways to go around this rule (for engineering companies for example CEO can contract out all lower paid jobs) but still it should be improvement compare to current status quo.