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CEOs Make More In First Week Of January Than Average Salary – Pay Ratios Are The Solution

The typical FTSE 100 CEO will have earned as much as the average UK worker earns in a year by 5pm on January 6 2020 – £29,559 for 33 hours of work, according to data compiled by the High Pay Centre think tank. By the close of the year, the same CEO would have earned £3.46 million – roughly 117 times the average wage in the UK. This is a staggering differential. If you believe that excessive executive pay is a problem, this statistic illustrates the point perfectly.

Paying The Boss 1,000 Times More Than A Worker Encourages Corporate Recklessness

Back in the 1960s and into the 1970s, few American corporate chief executives pocketed more than 40 or 50 times what they paid their workers. That divide looks quaint by today’s standards, but back then business analysts like the famed Peter Drucker considered even those gaps much too wide. Drucker called for CEO-worker pay ratios no wider than 20 to 1 or 25 to 1. Average Americans today, according to Harvard Business School researchers, consider an even narrower margin — no more than 7 to 1 — to be ideal.

CEO Compensation Has Grown 940% Since 1978

What this report finds: The increased focus on growing inequality has led to an increased focus on CEO pay. Corporate boards running America’s largest public firms are giving top executives outsize compensation packages. Average pay of CEOs at the top 350 firms in 2018 was $17.2 million—or $14.0 million using a more conservative measure. (Stock options make up a big part of CEO pay packages, and the conservative measure values the options when granted, versus when cashed in, or “realized.”) CEO compensation is very high relative to typical worker compensation...
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