BeyondGenius.com

The Economic Policy Institute reported that in 2005, the average CEO in the United States earned 262 times the pay of the average worker, the second-highest level of this ratio in the 40 years for which there are data. This imbalance seems to occur each time the economy heats up and can indicate a topping of markets and foretell an economic downturn.  We expect this number to increase and for 2006 to be the peak before the next downturn.    

Beyond economic prophecy, this trend reminds us of the general glorification of CEOs.  How many CEOs have you met that warrant earning more in one workday (there are 260 in a year) than an average worker earned in 52 weeks?  Is your CEO 262 times smarter, more talented, or harder working?  He/she might be twice as good, or 5 times better, or even 10 times more valuable to the corporation. Beyond that, it becomes celebrity and not related to any meaningful method of measurement.  While we are firm believers in free markets, capitalism and incentive based pay, we also believe that the owners of corporations (stockholders) have lost control of their businesses and that these hired guns have taken control of the corporations only to drag them through short term, incentive induced gyrations, while allowing long term prosperity to dim and suffer on someone else’s watch.  Of course, we know, there are always exceptions.  However, after taking these into consideration, we would still probably put this ratio of laggards to performers much higher than 262:1  How about you?