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Is there any real importance to the ratio of CEO to average worker pay?

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Expert Perspective by Grahall’s OmniMedia Editorial Board

The September 17, 2010 article in Financial Times (CEO/employee pay ratios) again addresses the nagging question of the seemingly outrageous difference between CEO pay and that of the average worker but raises the question as to whether a larger or smaller differential is “better”.   The author writes: “Would you work harder if the ratio [between the CEO’s pay and yours] was higher or lower? So called ‘tournament’ theories of income differentials reckon that higher is better…[but] others say that the level of chief executive pay is obscenely high and that investors have a right to know which firms reward bosses too much relative to the peons.”

Peons?  OUCH!   But let’s not argue the semantics of arrogance. 

Say on pay is here to stay.  Companies who are outliers with relatively high executive pay will be loudly criticized. 
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Filed under: Expert Perspective - Rewards