CEO Pay ratio: Everything you need to know

Taurai Masunda / Posted On: 18 December 2020 / Updated On: 15 November 2021 / Compensation and Benefits / 5

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CEO Pay ratio: Everything you need to know

People are concerned about CEO salary trends, because they are concerned about money. Each dollar going to a CEO is a dollar not going to them or anyone else. So when the CEO makes far more money than the average worker, people appear to take exception. The point is not that CEOs do not deserve to be the highest paid employee of any given organization, but rather that the CEO's compensation is so far in excess of average employees who are also vital contributors to the company.

 

The CEO pay ratio is calculated by dividing the CEOs compensation by the pay of the median employee. The CEO pay ratio give boards opportunities to assess how the pay ratio for their company compare with similar companies and whether there have been any drastic changes compared to previous years.



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