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Yup, compensation ratio is a false narrative. My CEO makes 100x more than me (roughly $30M). But he is not 100x better at being a CEO than I would be; he may on
by pumaontheprowl 6y ago
Yup, compensation ratio is a false narrative. My CEO makes 100x more than me (roughly $30M). But he is not 100x better at being a CEO than I would be; he may only be 2x better than me. The reason why he is paid 100x is because his decisions have the ability to affect billions of dollars in revenue, so having him as CEO instead of me could mean the company brings in an additional $300M in revenue next year. If you assume that he's bringing in $300M more than I would bring in, paying him $29.7M more than me does not seem unreasonable.
Overall, the CEO:worker pay ratio is a pretty meaningless statistic. At most companies, even if you were to entirely redistribute the CEO's salary to the employees, the employees still wouldn't see significant wage increases. For example, dividing Bob Iger's $47M salary amongst Disney's 155k employees would only result in a $300/year pay raise for each employee. People hoping to solve poverty by slashing CEO compensation are going to be sorely disappointed.
- extra88 6y agoYes, Disney is very large but CEO pay isn't proportional to employee count. If Elon Musk's compensation (almost $600m in 2019) was divided amongst Tesla's 70,000 employees, that would be ~$8,500/employee. If Sumit Singh's compensation (~$108m in 2019) was distributed amongst Chewy.com's employees (9,800 in 2019), it would be ~$11,000/employee. No one thinks bringing CEO pay back to Earth will solve poverty by itself.