Is an American CEO worth 10 times a British one?

July 12, 2011

In Hannah Cho's excellent article on Maryland executive salaries ("On the Rise," July 10), she brings up the ratio of CEO salary to median worker salary. She says "CEOs at the largest U.S. companies made on average 343 times the median worker salary last year, according to the AFL-CIO."

It is a lot of money compared to the average worker, but the CEOs would say the ratio is so lopsided because they are worth it, and you have to pay up to get good talent.

However what is left out is the ratio of CEO pay to average worker pay in other industrialized countries.

Steven Pearlstein wrote in the Washington Post:

"We already know from numerous studies that chief executives of large U.S. corporations make hundreds of times what an average worker makes, with the gap growing steadily wider. We also know it's possible to run successful advanced market economies with large corporations where the ratio is 25-1 (Britain), 13-1 (Sweden), 11-1 (Germany) and 10-1 (Japan). Whether the ratio at Exxon-Mobil last year was 320-to-1 or 276-to-1 seems rather beside the point."

Since other highly successful industrialized countries are able to acquire good talent in the CEO realm by paying far less this would seem to indicate that the argument for high, higher and highest CEO salaries is false. The simple question is why are U.S. CEOs worth 10 times more than CEOs of other industrialized economies in what I have been told is a globalized world?

Dana Ely, Fulton

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