Back To Career News

Mind the CEO-to-Worker Pay Gap

The days of unfettered CEO paychecks could be coming to an end, as global concern about pay inequality have begun to increase -- and it’s not just talk. From Germany to the United States, proposed legislation has been put in motion to limit massive payouts. In America, the main push is coming by way of financial reform, like the Dodd-Frank Act, which includes a provision that requires companies to disclose what the chief executive officer makes in comparison to the rest of the employees. This kind of public transparency has drawn much criticism as some businesses fear making such extreme differentials public.

The days of unfettered CEO paychecks could be coming to an end, as global concern about pay inequality have begun to increase — and it’s not just talk. From Germany to the United States, proposed legislation has been put in motion to limit massive payouts. In America, the main push is coming by way of financial reform, like the Dodd-Frank Act, which includes a provision that requires companies to disclose what the chief executive officer makes in comparison to the rest of the employees. This kind of public transparency has drawn much criticism as some businesses fear making such extreme differentials public.

(Photo Credit: nikoretro/Flickr)

Some European nations have already started taking action by introducing laws that cap executive pay and incorporate employee board members. Companies like Volkswagen have reduced the salary of their CEO, even though profits are hitting record highs. Similar efforts are being made all over the continent in hopes of reducing high turnover, low morale, and employee strikes. The International Monetary Fund has also recognized the benefits from regulating massive bonuses, noting that such measures would induce “faster and more durable growth.”

Do You Know What You're Worth?

Some notable CEOs have taken action as well in an attempt to balance pay distribution. Facebook’s Mark Zuckerberg is one of the CEOs supporting the idea by earning a $1 salary, an idea first suggested by Apple’s co-founder Steve Jobs. Even though Zuckerberg controls majority ownership of the company, the $1 annual salary is a strong indicator he and other $1 CEOs are committed to tying their financial fates to the success of the company.

This recent scrutiny is a sign of the times, as businesses and policy makers alike are being called upon to help close the pay gap. Only time will tell if a cooperative effort is put forth in order to bridge this great divide.  

Tell Us What You Think

Do you think executives are paid too much? We want to hear from you! Leave a comment or join the discussion on Twitter.


2
Leave a Reply

avatar
2 Comment threads
0 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
1 Comment authors
Jack Connelljill Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
Jack Connell
Guest

Executives of poorly performing companies are definitely paid too much but in general, executive compensation has become much more closely aligned to performance.  On the CEO to median worker pay ratio, it is a metric that is solely important to the press and shareholder advocates, but in reality it is somewhat meaningless.  The market is what the market is for both CEO’s and the employee population in general and firms cannot and most do not significantly overpay or underpay.  Are there a few bad apples still?  Absolutely yes.  Does the system still run amok?  No, as changes over the last… Read more »

jill
Guest
jill

Interesting article!

What Am I Worth?

What your skills are worth in the job market is constantly changing.