Your CEO Is Probably 364x Better Than You

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At least that’s according to the statistics, discussed on CNNMoney today, which show that the average CEO is paid $10.8 million versus the average employee being paid $29,544. In 2005, that multiple was 411x and in 2000 it was a staggering 525x. There are caveats to those numbers because the groups that did the studies did some strange math, strange as in I wouldn’t have done it this way, such as include in the average employee salary both part time and full time employees (uhhh… clearly doesn’t make sense to me). CNN Money estimated that if you took out part timers and considered non-managers, you’re talking about $40,000 a year and a multiple of only 270x – which isn’t that ridiculous I suppose.

My current company is privately held so I have no way of figuring out what the multiple is personally but at my last company, the CEO’s total compensation about 307x more than what mine (according to Reuters) was that same year… what was your multiple?

{ 8 comments, please add your thoughts now! }

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8 Responses to “Your CEO Is Probably 364x Better Than You”

  1. Rick Morley says:

    I work at a small non-profit, and the multiple is about 3x. Actually, I think the CEO is a bit underpaid in my case.

  2. If they could truly make rain, then their comp would be worth it… but what about the guy that gets fired from one High profile job in 2001… and takes another with a different large public company. His comp is based on Stock performance, which is coming with the recovery regardless of his direction. Bam.. huge income all due to his timing and an over sold market. There are a bunch of these bozos out there… If they can keep from saying racist, sexist comments and steer clear of Lude public behavior…then they get real rich. Honestly, who can’t look a Ford in 2000 and realize the whole car line has been junk for years.. Who can’t see that Phillip Morris should hide from tobacco, change their name and try to sell of the cigarette companys… Where is the genius in saying we should make a cell phone to sell in America that works as well as they did last decade in Europe… Oh Well.. maybe I’m just too smart. I’ll just keep covering peoples windows..

  3. dong says:

    Good CEOs are worth the money, but Walt points out too many bad CEOs just get another crack at it. The problem is that most company’s are pretty conservative about who they hire, they almost always want someone proven. It’s not unlike baseball historically where veterans are overpaid and overplayed when there might a rookie who is just as good if not better.

  4. I work at a start-up so it’s hard to put a specific number on this. I’m fairly sure the multiple is about 2-3 times me. However, if we sell or go public for what the value of the stock is, I think he’ll do that 300x easy.

  5. Brian says:

    I work for a very conservative company that does about $2B in sales and our CEO makes about 20x what I do. Of course, I think he’s worth at least twice what he’s paid.

  6. Mike says:

    If CEO’s were worth their money, I’d be happy for them to get it, but my experience is that they havn’t been worth it. Of course, I was in the tech industry while everything was imploding and all the CEOs presided over the failures and jumped out with their golden parachutes.

    But I’m not bitter…

  7. PR says:

    I’m a CEO of a 15-person company. I started work today at 6:45AM EST. It’s now 10:53 EST. I took an hour lunch with my sales department, and a 30 minute coffee break with my marketing guy. I’m really tired, but the day is still not complete. One of my programmers messed up our website and I have to fix the problem before a potential investor receives an overnighted business plan. I’ll probably go home around 12:30, ending up with a 17 hour and 15 minute work day.

    I currently make $46k/yr. The programmer that decided to worked 8 hours today makes $55k/yr. I work, on average, 175% as much as him.

    My company may succeed. My company may fail. I’m comfortable with this. I love the thrill. I’m taking the risk on for the possibility of a reward. The programmer has a 2-year contract with guaranteed employment. I’m the guy that took on 33% of a 4 million dollar debt to pay his salary.

    A CEO may earn more, but they’re taking on a lot of risk.

    Obviously this only applies to smaller companies. 🙂

  8. MoneyNing says:

    My company is actually 100% privately owned by my CEO, so yes, he is better and it’s not just 364x 🙂

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