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If You Were In Charge Of Your CEO’s Pay, What Would It Be?

The clear divide between CEO compensation and their approval ratings illustrates that it’s time for a change.

If You Were In Charge Of Your CEO’s Pay, What Would It Be?
[Image: Fer Gregory via Shutterstock]

CEOs listen up! Your employees, some of your company’s biggest stakeholders and best brand ambassadors, think you could be doing a much better job.

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A number of leaders from the world’s top companies have an employee approval rating that barely qualifies as a passing grade, which shows that employee approval ratings are barely–if at all–factored into CEOs compensation packages.

If you compare Equilar’s annual list of the highest-paid CEOs with Glassdoor’s list of the highest-rated CEOs, you’ll find, unsurprisingly, that employee approval ratings for the top earners are lacking.

The likes of Oracle’s Larry Ellison, Don A. Mattrick of Zynga, and David Cote at Honeywell International brought home compensation in the eight-digits, but none of them hold employee approval ratings higher than 78%.

The extreme compensation packages earned by CEOs have been under fire from both shareholders and the general public over for years now, but little seems to be changing. According to the AFL-CIO’s PayWatch 2014 report, the average CEO earned 331 times that of the average worker’s wage last year.

The third-highest-paid CEO, Ellison, is a favorite target for the media’s criticism. Oracle’s shareholders took notice of Ellison’s extreme pay package and voted for the second consecutive year to cut his annual compensation. And just last month Oracle’s compensation committee slashed Ellison’s annual stock options by more than half.

He’ll need to hold onto his paychecks though if he wants to continue his streak of lavish spending. He recently paid over $100 million to participate in the America’s Cup and purchased the Hawaiian island of Lanai for $500 million in 2012, but what else would you expect from the fifth richest person in the world?

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One could argue that any CEO is entitled to spend his earnings as he sees fit. But these high-profile and lavish shopping sprees certainly do not improve employee-employer relations as the wage gap in the U.S. increases.

The clear dissonance that exists between the two groups is likely to continue as long as employee opinions are delegated to human resources and not the boardroom.

Should a CEOs employee’s approval rating be factored in during the formation of an executive compensation package? Tell us what you think in the comments section below.

Thomas Kiely works in international marketing and is currently a Master’s student studying branding at Copenhagen Business School.

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