When Does Executive
Pay Become Excessive?
The lightning rod executives are
afraid to touch
By Dudley R. Slater
“We published it,” Leslie Braksick said, referring to
the salaries of the leaders of her company. “We were
very open about it.”
Leslie Braksick stands out as one of the most
successful entrepreneurs and CEOs I know. Yet,
if she were so smart, why would she “publish”
information that can become a lightning rod in any
And why is the subject of the boss’ pay generally
guarded as a castle secret by most organizations?
It literally took an act of Congress (empowering the
SEC) to compel public companies to shine a light on
the amounts executives get paid. And why did the
U.S. congress feel compelled to adopt rules in 2010
that require public companies to disclose the ratio
of the highest paid executive compared to the pay of
the average employee?
Because, um – well, maybe it’s a little embarrassing?
Can you imagine getting on an elevator to go home
at the end of the day, finding yourself standing next
to a work colleague who casually mentions that
he or she makes more in a day than you make in a
year? Think of JP Morgan, WallMart or Comcast.
Now reverse those roles. How would you feel about
making hundreds of times more than the person next
to you on that elevator? Would you both feel like you
share a common Mission? Would you feel like your
both “in this together,” fighting for a shared cause?
Before addressing the question as to the impact
of pay on a culture of shared commitment, let me
be clear- I am a capitalist. I believe in the American
Dream of creating wealth in exchange for hard work.
I believe in rewarding those risk-taking entrepreneurs
who bet their fortunes on their capacity to innovate.
And I certainly agree that those leaders who run
our large companies, who create jobs and employ
thousands of workers, should make more than our
professional athletes, who play games for a living.
Ok, back to the elevator. Not only might it be
embarrassing, it’s also demotivating. That lower
paid worker, upon learning that his boss makes
hundreds times more, is likely to conclude that his
job description is (at least in part) to make his boss
wealthy. Upon learning this, who wouldn’t conclude
that one comes to work on Monday morning merely
to enrich and empower his boss? And, it is true (at
least in part)? After all, workers show up to help
the company succeed and highly compensated
executives are siphoning off a part of that success.
So what? Compensation professionals might point out
that these highly paid executives are merely earning a
“market wage.” In fact, a common response to those
SEC disclosure rules is for boards to hire independent
compensation experts, helping satisfy investors and
validating that many of these lofty compensation
packages are comparable across the market for
similar skill sets. Again, in a capitalistic society, like
Talent Management Excellence presented by HR.com FEBRUARY 2020 23 Submit Your Articles