What does this say about us?

Answer: That we are dumb and will have a knee jerk reaction without understanding anything, so long as pretty colors and a nice font are used?

These infographics drive me crazy; always, begging for a knee jerk reaction without any rational thought or understanding.

I'm not saying that there isn't a problem. I'm just saying that without understanding the why, it is a useless knee jerk reaction.

(Up front, I'm guessing this is put forth by a pro union group who probably doesn't want a rational discussion, but that's another story...)

I have a few questions that should be answered before we can proceed with a rational discussion:

  1. What type of compensation are we talking about here? Just the paycheck? Or paycheck + future stock options? On the employee side: just full time employees, or both full time and part time? Do we include benefits, taxes paid, retirement plans(if any)?

  2. Who owns the company? If the CEO is also the majority owner, are you including that in the calculation? (e.g. When George Lucas sold Lucasfilm for ~$4 billion, does that get included in this?)

  3. What structure? C-Corp, S-Corp, LLC, LLP, DBA, etc. ? This matters because ownership and pay structures greatly differ for the different types of company structures. (And, keep in mind those few that I listed here are just the common ones in the US. There are 100's of different types of company structures around the world.)

  4. In this day and age of multinationals, what constitutes a "US firm"? HQ? Charter location? Bulk of employees? With so many offshore holding companies, it's difficult to define what constitutes the nationality of a company. (e.g. One of my former employers has employees working in over 80 countries. Are we controlling for cost of living? Does this ratio account for the CEO who lived in Europe vs an hourly worker in Nigeria? )

Given the above, I think we can agree this is a complex question that may not be completely reflected in a simplistic infographic.

I did a quick google search and found that even the most anti capitalistic sources suggested that the US was 354:1 and Germany was 147:1. While these numbers are still rather large, they don't come close to the numbers presented here. Unless you can source otherwise, I'd suggest that this data is wrong and likely intentionally misleading.

Further, accounting to this source, "After controlling for firm size, ownership, and board structure, all characteristics that often differ between U.S and international companies, the gap is reduced, with U.S. executives earning only a 26% premium." (This source attempts to answer some of the questions I asked at above. )

Given the above, I'd politely suggest that this inforgaphic is useless propaganda designed to mislead dumb people.

Are (non owner) CEOs paid too much? Probably. But, is that the point being asked here? Nope.

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