I'm curious what determined the 1:12. If you assume that $10wage represents the lowest wage, then ~$120/HR or roughly $240K/year would be th cap. I assume this does not include bonuses? Interesting thought but I'm sure there would be many CEO's who wouldn't like 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 with that. Some of the smartest, efficient people I know who always had the good of the company in mind never made it past middle management. It's similar to politics, I think, the people you really want in office will never run.
Absurd CEO compensation via stock to "align" management interests with supposed shareholder interests got a huge boost from the equally lame concept of "maximizing shareholder value", which is also finally getting some overdue scrutiny:
I'll give you my explanation, which explains why the explosion occurred. In one word: Reaganomics, which is based on the Trickle-Down (on) Theory. The theory is that if you make the richest people even richer, they'll have more money to spend and that will provide more money for everybody else. The problem is that if you give money to people who have so much that they can't spend what they already have, they're not going to spend more. They'll just add it to the big vault and swim in it like Uncle Scrooge McDuck.
If you give ordinary people 10% more money, they'll be able to afford to eat in restaurants more often -- say an extra once a week. This creates restaurant jobs, and the people with those jobs have more money to spend on other things like haircuts and cars, and before long all boats rise with the tide.
If you give people with tons of money 100% more money, they'll be able to afford to eat a fancy dinner in a fancy restaurant every five minutes. But of course they can't, so the money goes in the big vault (fancy a swim?) and people end up unemployed.
I've yet to hear a credible explanation justifying why the USA CEO/worker ratio has exploded by 10x since the 1960s, with most of that since 1990, or why they are paid about 2x more than their foreign counterparts. Are contemporary CEOs 10x more talented than their predecessors? Are American CEOs so superior to European or Asian ones? Is running a company 10x harder than 50 years ago? Foreign companies don't seem to have trouble finding capable CEOs at much lower pay levels.
There is more than basic fairness at stake. Like excessive risk taking, empire building and general short term orientation to increase stock prices, no matter what. When you read studies stating that between 66% to 75% of mergers and acquisitions fail to pay off, or that diversifying beyond core business so often ends in disaster, just how "efficient" is business, really? When I see vast sums squandered on acquisitions neglected into oblivion, or white elephant projects that go nowhere, no wonder worker pay has stagnated.