CEO pay should be a % of total employee compensation. Want to earn more? Gotta raise pay or benefits for all other employees. Need to lay people off? Do what you need to do but you made the pie smaller so your compensation goes down.
This is actually supported in the scientific literature as we know that once the pay disparity between leaders and employees goes over a certain threshold it starts to decrease basically everything for employees from wellbeing to basic productivity (I know the citation but not home and lazy to send it). Problem is most organizations don’t actually really want to make good effective workplaces that are good for everyone as they only want to benefit the people on top in the short term.
Yeah I’m doing work today so I can get you the exact figure. So this is kind of a composite of different research as we have two points here:
heightened pay disparity leads to all the outcomes I described earlier (Wilkinson, R. & Pickett, K. 2020; Bloom, 1999; Bloom & Michel, 2002)
research assessing what this level of disparity looks like in companies for CEO pay (n= 55,238, 45 countries sampled) shows that individuals roughly find justifiable pay should be between 5-10x the lowest paid employee. So if you have your lowest paid employee making 75k the CEO should only make a maximum of 750k to keep a level of perceived equity. (Kiatpongsan & Norton, 2014)
This would incentivize paid CEOs that lack equity to hire more people and fire fewer people, even if it wrecked the business. Sometimes businesses need to decrease the employee headcount if revenue is declining or they won’t be able to pay anyone. I understand your desire to be more inclusive and have less pay disparity, but the best way to do that is with taxing the ultra wealthy and giving a certain amount back to the lower classes rather than actually try to alter market forces that would result in unusual inefficiencies and problems. A big reason why we have capitalism is to make sure things like food and other essentials are supplied In sufficient quantities. I am not in favor of unregulated unchecked capitalism, but the idea that we can pay CEOs more as wages go up for everyone in the company is an idea that only will work well with smooth sailing. Any rough waters and that idea won’t make sense. (This post is not condoning extreme poverty which is due to the poor policies of many elected leaders.)
That’s still $9.87 million too much
Facts. CEO of target should be like 70-80k per year. No extras. No bonuses, no free stocks. Just the salary.
Unironically.
I’ll give you 120k per year. Fair enough.
CEO pay should be a % of total employee compensation. Want to earn more? Gotta raise pay or benefits for all other employees. Need to lay people off? Do what you need to do but you made the pie smaller so your compensation goes down.
This is actually supported in the scientific literature as we know that once the pay disparity between leaders and employees goes over a certain threshold it starts to decrease basically everything for employees from wellbeing to basic productivity (I know the citation but not home and lazy to send it). Problem is most organizations don’t actually really want to make good effective workplaces that are good for everyone as they only want to benefit the people on top in the short term.
Do you know the ballpark of the disparity threshold where this becomes detrimental?
Yeah I’m doing work today so I can get you the exact figure. So this is kind of a composite of different research as we have two points here:
This would incentivize paid CEOs that lack equity to hire more people and fire fewer people, even if it wrecked the business. Sometimes businesses need to decrease the employee headcount if revenue is declining or they won’t be able to pay anyone. I understand your desire to be more inclusive and have less pay disparity, but the best way to do that is with taxing the ultra wealthy and giving a certain amount back to the lower classes rather than actually try to alter market forces that would result in unusual inefficiencies and problems. A big reason why we have capitalism is to make sure things like food and other essentials are supplied In sufficient quantities. I am not in favor of unregulated unchecked capitalism, but the idea that we can pay CEOs more as wages go up for everyone in the company is an idea that only will work well with smooth sailing. Any rough waters and that idea won’t make sense. (This post is not condoning extreme poverty which is due to the poor policies of many elected leaders.)
What is he supposed to buy with less than ten million, a smaller yacht? Excuse me, but I thought this was an oligarchy!