I have a friend who once suggested that our society would be more just if every worker -- from gravedigger to CEO (his examples) -- were paid the same.
While I appreciate my friend's
ridiculously naive utopian sentiment, removing all financial incentives for people to pursue high-skill and high-risk professions would wreak havoc on the
GDP, to say the least. It would create a nation of underachievers, robbing us of talent in critical professions. Why go through years of medical school to become a brain surgeon, say, only to end up making as much as the guy who's sweeping the hospital floor, or the president?
Still, when one
reads stuff like this...
Between 1990 and 2000 in the U.S. worker pay and inflation remained approximately equal, while corporate profits rose 93% and CEO pay rose 571%.
...and
this...
[B]y 2005 the average CEO was paid $10,982,000 a year, or 262 times that of an average worker ($41,861).
...it's hard to argue that the
current system is a whole lot more rational than the flat-pay model. It certainly isn't more fair.
I was reminded of all this when I read a CNET
blog post titled
Are technology CEOs overpaid?.
The answer, of course, is that they mostly are overpaid, some obscenely so. The blog's author argues that "CEOs are our nation's business leadership. In aggregate, they are the embodiment of U.S. market capitalism. As individuals, they take on huge responsibility, risk and work loads."
Agreed, but only up to a point. I don't necessarily buy the "risk" argument. Sure, if you're a founding CEO who has invested his or her own money into a company, or if you left a lucrative career as a paid employee without a fall-back, that's risk. But if you're a member in good standing of the informal CEO/executive network, well, let's just say that Carly Fiorina and Terry Semel aren't going to be homeless any time soon.
I bet almost everyone reading this has worked for a chief executive who was incompetent, someone who either was handed the job or stayed on past any point of usefulness. How many of them ended up crashing and burning? More likely, they just moved on to the next lucrative (and undeserved) gig -- another CEO job, a consultancy, a think tank, whatever -- with the help of one of their business buddies who had been hand-picked to serve on the board of directors. Or the fallen CEOs just live off the "golden handshake" that they negotiated when they were hired.
It really is nice work if you can get it.
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