There is too much disparity in the salaries in US than Europe. I think that it has to do with rules and regulation. The same rules and regulations can be applied in US and i donot agree with those distractors that say the companies will loose out with competitors. I thinks the management in Europe is on par with US at a much lower cost.
A lot of good points here from all sides. Yes, a good CEO is worth a lot, but how much is a lot? and what is wrong with offering the workers stock options at the same rate per $ paid? and if the company goes belly up, aren't the workers entitled to the same golden parachute protection that the CEO is (again proportional to their pay?)
I like Dr Marty's idea of voluntary reporting of metrics, but to overcome the greed of these guys I think a bit more stick is necessary. Ratios between lowest / highest pay are a good idea and simple to implement. As are enforcing CEO pay rises be no more than the workers get. I recently got 2.5%, around the inflation figure so does not mean much, after a long fight, with the union threatening industrial action. Our CEO got 25% with no such struggle. "How to demoralise your workforce: 101".
Ad D. McCunney says, it would be meaningless to distribute the CEO's excess to the workers. But by mandating that all workers get the same stock options as the CEO, and putting that money towards the dividends, everyone has an incentive to do their best. Carrots alone don't work with greedy CEO's, some stick is needed.
I would rather see this question tackled in the context of Corporate Social Responsibility where organizations voluntarily publish key metrics. Examples could be the mode, median and mean salary of all employees with respect to that of the CEO (and executive team) but I'm sure there are probably other metrics too; or someone could even come up with an index that somehow munges all these metrics into a single figure that over time, would have some meaning.
Bert, I totally agree. I wouldn't want the job, but I can't complain too much about their salary. It does tend to be kind of like the government. You have the board and CEO making the rules and voting themselves raises. It is a gravy train until bad times, like when the company or country goes bankrupt. Then they have their golden parachute and the little people suffer.
Of course, board members tend to be top execs from other companies, also paid way more than the average worker, so it's not surprising that they scratch each others' backs.
Still, having the CEO of a company with ~100,000 employees or more paid a few hundred time more than the average worker means that it's not so much a question of his salary affecting negatively the workers' salaries. It's more a question of basic fairness, common sense, and you know, decency. Those intangibles.
I'd deteste doing their job, so I'm not envious by any means. A life of meetings, hustling, and gladhanding, doesn't sound appealing. I just don't want to hear them pontificating at me about ethics.
I am also of the opinion that the compensation packages of the CEO's in public companies should not be legislated by any government at all. Instead, the shareholders have that right to exercise. To that end, the SEC's proposed requirement to list the ratio of CEO's vs. median salary of employees is a good idea that can provide feedbacks to any shareholder action.