Executive compensation
A while ago, I investigated how much CEO’s deserve to make. My conclusion, we needed better tools for quantifying the worth of executives to a company.
This presents a further challenge, that of determining the value of the executive to the company. Supporters of current executive salaries would argue that these people are the most important figures in gigantic corporations, and that their salaries reflect their contribution. Given that the ratio of a CEO salary to the average worker in the company is increasing so sharply, this would mean that the relative value of company executives has been rising exponentially.
Debates over executive compensation have ignored these trends, and commentators have failed to seriously investigate metrics that could actually measure the value of a CEO to a company. Unfortunately, that’s the only way to settle this contentious debate.
Now, it looks like politicians are taking a step in the right direction, requiring “companies to disclose the ratio between a chief executive’s pay package and that of a typical employee.”
Companies are complaining that these metrics would be complex and potentially misleading, if they have suggestions for making these calculations clearer and more reliable, that’s great, but scrapping this plan altogether would be a mistake.
This new requirement would provide important data in investigating the difficult issue of executive compensation.
-Luke
This image was used under a Creative Commons attribution license from Flickr user Nestle.
Related posts:
- How much do CEOs deserve to make?
- Corporations and generosity
- How much should federal employees make?
- Performance and reward in the public sector
ShareComments
Leave a Reply
