Great Men, great pay? Why CEO compensation is sky high.

Nancy F. Kane is a historian at Harvard Business School. She is also the director of Tempur Sealy International and Fashion to Figure.

Why are so many CEO compensation plans stupid? Why do they continue groaning before the wages of most workers?

According to data released this month by Executive Payroll tracking company Equilar, the top 200 CEOs of the US CEO in 2013 received an average of $ 20.7 million in salary.

Morgenson (2012) reports that many companies are thinking that if you do not pay high salary CEO fees, you can not win the highest quality CEO. As a result, many companies say that they focus more on hiring the most competent executives, not just saving rewards and ultimately losing a promising future. It is an executive company. Furthermore, in fact, many companies in the United States think that it is necessary to keep up with all the work of competitors according to market conditions. This is a classic case of catching up with Jones. However, the Compensation Committee of the company may choose to present a compromise plan to provide reasonable compensation incentives to the CEO according to the company's performance.

Several recent studies have shown that there is an inverse relationship between CEO's compensation and company performance. "Reverse" means that the higher the CEO's compensation and options, the lower the company's financial performance. After decades (perhaps the most) bankruptcy of the banking industry, Wells Fargo was fined $ 1 billion, shareholders failed to beat CEO Tims Long who was there to swear what he was doing What a wonderful job you did and people do not understand. According to the report, the tax treaty of playing cards is that the fine of Wells never really hurt the bank.

For employees with high salaries and salaries, the CEO has not paid more than they paid. On average, the CEO receives about 50% of basic pay as a bonus. However, these "bonuses" did not cause significant changes in the CEO's compensation. Comparison of CEO's annual inflation adjustment wage fluctuations from 1975 to 1988 with variance of randomly selected twenty hourly workers and salary workers' payrolls has a very similar distribution Indicated. In addition, during this time, the actual salary cut rate of the CEO was lower than that of the production workers.