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there are a couple problems with this. if the CEO is also a major shareholder (maybe they're also the founder), they don't actually need salary or bonuses to m
by leetcrew 7y ago
there are a couple problems with this.
if the CEO is also a major shareholder (maybe they're also the founder), they don't actually need salary or bonuses to make huge amounts of money from the business.
this can also create a perverse incentive for the salary structure. the CEO's pay is maximized by maximizing the lowest salary in the company. the easiest way of doing this is to pay everyone 1/10th of the CEO's pay. depending on the size of the company and the existing pay disparity, this could make most of the employees worse off than they were before. it might be better to target median or mean compensation instead, although you could probably find pathological counterexamples for these approaches too.