She reports the gap has roughly doubled since 1994 to 180 times – the multiplier for the difference between the CEO and an average worker wage. With the average CEO salary about $8.8 million, the average worker wage is just short of $50,000.
It is hard to argue that such a disparity might be dispiriting to workers. Further the incredible golden parachutes awarded to deposed CEO’s [that is, ones who have been chief of a losing company] is disconcerting if not sickening. The unfairness of a failing company rewarding its departing CEO with such largesse (millions of dollars in some cases) while laying off workers living from pay check to pay check is obvious.
But is morale really a function of the CEO pay? I did a quick check of some NBA salaries to see what kind of disparity they work under. Take the Boston Celtics who had the best record in the NBA this year and are favorites to win the title. The highest paid player on the team is Kevin Garnett who makes $23,750,000 this season. I compared him to the lowest paid contributing member to this excellent team—Glen Davis who made $427K as a rookie this year. This is a differential of 55 times between peers who must work together as a team!
This kind of pay gap is not unusual; the Denver Nuggets highest paid player make just over $20 million and a frequent starter (Linas Kleiza) makes about $1,000,000. One of the points of the article is that the ones affected by the high CEO salary is the rest of the executive team. General Electric CEO Jeffrey Immelt is quoted in the article, “Should the CEO make five times, three times or twice what this group [Executive Team] makes? That’s debatable, but 20 times is lunacy.” Well the best team in the NBA has a gap of 55. Next time I will explore further the common assumption on high executive pay.
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