To say executive pay is out of control is a bit of an understatement. Years ago, the CEO probably made about 15-20 times what the average salaried worker did. Now that number is more like 400 times the average worker. WOW!
There are many articles every day that address this topic, but little headway has been made to reign it in. A couple references for this post include Leo Hindery's appearance on Fox Business and Ray Williams article in Psychology Today.
By no means am I proponent of ANY type of governement regulation in this area. I'm a firm believer in the free market. Regarding any sort of pay issues, I'm generally a believer that the appropriate pay levels are whatever the market will bear. However, in the case of executive pay, I think the main monitoring mechanism (corporate boards) has failed miserably. Hindery touches on this as well. Corporate boards have been lax in creating and enforcing longer-term, performance-based pay plans for its senior executives. It's good to see shareholders starting to get involved (i.e. executive pay plans coming up for votes at annual shareholder meetings). However, they are mostly non-binding, so they don't have any teeth just yet.
Unfortunately, a very real by-product of exorbitant executive pay is a less than inspired workforce. And I can't blame them. The average worker today works just as hard as they did a generation ago. And CEO's of today work just as hard as they did a generation ago too. But 400 times harder than the average worker? I don't think so.
***UPDATE: Some very good news on this topic. Whole Foods actually has a cap on executive pay at 19 times the company's average hourly wage! Co-CEO John Mackay calls it a part of their "conscious capitalism" strategy. Heck, Whole Foods doesn't even have a corporate jet!
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