CEO pay has increased 725 percent over three decades, while worker pay has essentially remained flat. Corporations argue that the excessive compensation isnecessary to retain top talent, but a new study blows a hole in this highly-improbable theory:
It is increasingly apparent that the pay awarded to chief executives is becoming profoundly detached from not just the pay of the average worker, but also from the companies they run. Offsetting the external focus, which is so heavily relied upon today, with internal metrics and internal benchmarking may help to curb the persistent escalation.We hope that if directors are no longer constrained by notions of “competitive” pay, which are driven by the false belief that CEOs are interchangeable, they may have the space to rationalize the upward spiraling pay ratchet and deliver what is more shareholder acceptable compensation.
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