Let's talk about executive pay - Kathy Varol

Let’s talk about executive pay

executive pay

It’s easy to blindly follow the way things have been done without stopping to consider if it’s the best way to do things. If the standard approach is in line with our values, or the way we want the world to operate.

Let’s take a minute to consider executive pay by contrasting two approaches.

Dr. Bronner’s leadership team self-imposed a 5-to-1 executive pay cap. That means the CEO will never make more than five times what the lowest-paid salaried worker makes.

The majority of companies do not have an executive pay cap. That’s the standard approach.

What happens when people running the company control pay?

CEO pay has grown astronomically.

CEO compensation has grown 940% since 1978, while typical worker compensation has risen only 12% during that time (78 times LESS growth). The average CEO-to-worker pay ratio of S&P 500 companies was 264-to-1 in 2019.

“CEOs are getting more because of their power to set pay, not because they are increasing productivity or possess specific, high-demand skills. This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. The economy would suffer no harm if CEOs were paid less (or taxed more).” – Economic Policy Institute

The minimum wage in the USA is 7.25/hour (or about $14,500 a year, which just sneaks over the single-person poverty line in the USA at $12,490).

Let’s aim higher than minimum wage, and use the US 2019 median wage at $19.33/hour (or about $40,000 a year). What does the executive pay gap at Dr. Bronner’s look like compared to the average S&P 500 company?

Entry Pay (using median 2019 numbers) CEO pay (example)
Dr. Bronner’s $40,000 $200,000
Average S&P 500 Company $40,000 $10,650,000

Dr. Bronner’s uses that $10,450,000 difference in executive pay to invest in causes they care about. They use those dollars to create change in the world versus lining the pockets of their leadership team.

The next time your company talks about not having enough money to be a force for good, it might be worth looking under the hood to see where the money is currently going. Question if the current setup illustrates the values of the company and builds the type of world employees want to live in and support every day with their talents and skills.

It’s time to start demanding better systems.

It’s time to start demanding more equitable norms.

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