CEO Pay 364 Times Average Workers

It's really hard to fathom how a CEO can be worth 364X that of an average worker at his or her company. I'm sure if 364 people got together they could make better decisions than 1 CEO

The Institute for Policy Studies and United for a Fair Economy reported last Wednesday that CEOs make 364 X more than the average worker.  I'm not a socialist or a communist but something about this just doesn't seem right.  Now, this isn't the first time numbers like this have been published.  The issue is perenially raised as an example of corporate excess. 

My beef is that it's bad corporate governance and wasteful to shareholders to spend such money on one individual.  When I mention it to my business friends they all tell me: "yeah, but the CEO earns his money.  He's worth it and no one else can do the job."

Really?  I doubt it.

I guarantee that if you took 364 random people off the street, gave them access to all of the data a CEO has, and then paid them an average wage, they would make decisions as good, if not better than 99% of the CEOs out there.  Let me make this clear.  I'm not doubting the value of CEOs, I just think their a pretty lousy buy at this price.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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Comments

  • David Gersh

    September 04, 2007

    This culture of coronating CEOs has to stop. The rationale that Board keep applying - not that these people are worth it, but that there is intense competition for these individual - is specious at best. I believe that in Scandinavia, CEO compensation is legal capped. It should be here, because it will ultimately impact our competitiveness.

  • anne reid

    September 05, 2007

    We live in a bifurcated world - the worker bees and the queen bees.

  • Jerry Green

    September 26, 2007

    Sure doesn't seem right to me.

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