Down the Rabbit Hole of Leadership by Manfred F. R. Kets de Vries

Author:Manfred F. R. Kets de Vries
Language: eng
Format: epub
ISBN: 9783319924625
Publisher: Springer International Publishing

© The Author(s) 2019

Manfred F. R. Kets de VriesDown the Rabbit Hole of Leadershiphttps://doi.org/10.1007/978-3-319-92462-5_12

12. The CEO Mega-Pay Bonanza

Manfred F. R. Kets de Vries1

(1)INSEAD, Fontainebleau, France

Manfred F. R. Kets de Vries

There are three faithful friends—an old wife, an old dog, and ready money.

—Benjamin Franklin

The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.

—John Kenneth Galbraith

Alas, what terrible news! According to the most recent report from the Economic Policy Institute, the average CEO-to-worker pay ratio in the U.S. has gone down from 286:1 (in 2015) to 271:1 (in 2016).1 To many top executives, this disappointing number is far from the peak of 383:1 it reached in 2000. But in spite of this bad news, it’s encouraging to know that most CEOs will not receive a pauper’s wage.

Looking at these mega-figures, it appears that nobody has heeded the warnings of management sage Peter Drucker, who noted that the proper ratio between a chief executive’s pay and that of the average worker should be around 20:1 (which it was in 1965). Drucker believed that larger discrepancies in pay ratio would bring about problems of morale within the workforce. As things stand now, however, many CEOs earn more in one workday than the average worker makes in an entire year. But while CEO pay has sky-rocketed, the average wage of workers has remained static.

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