The Appalling Ratio of US CEO/Worker Pay

My Gartner APAC colleague Darryl Carlton and I recently discussed the obscene ratio between CEO pay and average worker pay in the US. And this IS about the US – we are supporting an astonishing gap compared to the rest of the world, and high tech vendors like Oracle are not the only ones at the top of the list – Larry Ellison comes in only number 4 on this Bloomberg list, pulling down 1,287 times what an average Oracle worker (not impoverished at nearly $75K per year) collects.

Personally, I was surprised that the banking community was not represented “better” here – but perhaps that’s because there seem to be dozens of executives, not just the CEOs, in every firm currently hauling cash home in wheelbarrows as mortgages remain underwater and pension funds and healthcare plans get de-funded. At least they share with each other.

In my conversation with Darryl, we discussed the link to company performance. Pick your measure – stock price, revenue improvement, etc. – in general those gorging at the trough are not dramatically outperforming their peers – and they certainly are not doing 10 times, or a hundred times, better than their counterparts in other countries. But look at how the  US plutocrats compare to their brethren in other countries – Japan at 11:1, Britain at 22:1 –

and the US at 475:1.

It’s all in the table linked below.

CEO Pay Ratio

Darryl notes that

Drucker argues that CEO pay which exceeds 20-25 times the average paid in that company is bad for business. The new law in Australia is that if 25% of the stockholders vote down executive pay twice (two strike rule) at successive AGM’s then the Board can be replaced. The CEO of Lenovo in China has once again distributed his bonus to the lowest paid factory workers.