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Do CEOs Deserve Their Pay?

The myths behind the mega pay

Manfred Kets de Vries
Thu, 03/22/2018 - 12:02
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According to the most recent report of the Economic Policy Institute, the average CEO-to-worker pay ratio in the United States has gone down from 286 to 1 (in 2015) to 271 to 1 (in 2016). This number may disappoint many top executives who were hoping to see it return to its peak of 383 to 1, achieved in 2000. But in spite of this “bad” news, it’s clear that CEOs will not receive a pauper’s wage.

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Looking at these figures, it appears that nobody heeded the warnings of management sage Peter Drucker, who determined that the proper ratio between a chief executive’s pay and that of the average worker should be around 20 to 1 (as it was in 1965). Drucker believed that larger discrepancies would bring about morale problems within the workforce. As things stand now, many CEOs earn more in a single workday than the average worker makes in an entire year.

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