Ceo vs Worker Wage Gap

In: Business and Management

Submitted By coopertrew
Words 454
Pages 2
CEO vs Worker Wage Gap
The pay gap between CEOs and the average worker are more of a recent topic of discussion amongst the business world, and for a good reason. To start off with some startling statistics, by 12:18pm on the first working day of the year, the highest paid CEOs will have earned what it takes most Canadians to earn in a year - that’s about 40 000 dollars. The current CEO to worker pay ratio is about 300:1 while in 1978 it was only 30:1, which shows just how much the wage gap has changed over the years. In fact, The largest pay gap of CEO’s to workers was at the media company Discovery Communications. In 2014, CEO, David Zaslav, earned $156.1 million; approximately 1950 times the firm’s median salary of $80,000.
The Dodd-Frank law, which was approved in 2010, will require companies to compare the median income of employee’s total annual compensation to the CEO’s total annual compensation and the companies must then disclose this ratio.
Why do they need to disclose the ratio?
A company with a 1000:1 CEO to worker pay ratio needs to charge 50% less for its products in order for consumers to want them as much as full priced products from a company with only a 5:1 CEO to worker pay ratio.
CEOs get paid by their base salary followed by bonuses, stock option packages and pensions. More recently, pay for performance among CEOs is becoming popular in the idea that CEO performance provides value to the organization. In Canada CEO pay is already aligned with how well their companies succeed. Another important topic to note is the idea of professional athletes getting paid for bring their team success and excelling in their concentration… so why are CEOs getting scrutinized for running large companies when they produce value in the form of shareholder equity?
One example of a CEO that has been paid for performance is Yahoo CEO Marissa Mayer. Marissa…...

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