CEO Pay

By Eric Crampton 07/05/2015 2


I reprised this post at a symposium on CEO pay at Otago University on Friday.

Here’s my presentation – I had a half-hour to generally survey the lit on why CEOs are paid what they’re paid.

 

Note that I here overestimated the pay ratio in New Zealand when I contrasted the 25:1 CEO:worker pay ratio with America’s 300(ish):1 ratio. Helen Roberts, who followed, noted it’s only about 17:1 here.

In global markets for talent where highly skilled CEOs can move to the spots where they can add most value, should we really celebrate relatively low CEO pay in NZ? Doesn’t it just mean that we haven’t really any of the kinds of firms that warrant having the very best managers?

I spent a fair bit of time cautioning against our importing American narratives about pay trends without actually checking NZ data.


2 Responses to “CEO Pay”

  • Forget about the ratio – the begged question is “what is the value that is being added by the individual”?

  • Does more pay buy better managers? Probably not. More realistically, it probably just buys managers who are better at promoting themselves and stifling their competitors.