Stephen Kotkin of the New York Times business section, reviewing a new book by Robert Reich:
[Reich criticizes] runaway C.E.O. pay but offers no prescriptions.
Capping executive compensation is liable to be rejected as un-American, which it is. So here's my suggestion: a legally binding maximum on C.E.O. multiples of their own workers' salaries. Let's pick a multiple of 300, well above the historical average. If chief executives want to be paid hundreds of millions, and boards comply, no problem; the C.E.O.'s task would be to figure out how to pay the company’s lowest worker hundreds of thousands.
First of all, why would capping the pay of CEOs at a certain dollar amount "be rejected as un-American" but capping it at a certain multiple of lower-paid workers' salaries wouldn't?
Beyond that, why would this work at all? I'm not an MBA or a number-crunching brainiac, but even I can figure out how you'd circumvent such a limit: You'd just transfer all the lower-paid workers to a dummy corporation that -- on paper -- wouldn't be the same as the corporation the CEO runs. This corporation would subcontract the lower-paid workers' services to the CEO's corporation. The workers could still get the same pay and benefits they previously got, and work in the same office they previously did; you could arrange it so the only difference they'd notice would be that their paychecks had a different company name on them. Then the CEO could earn 300 times what the remaining higher-paid workers earn.
How hard would this be to arrange? And why wouldn't every corporation that wants to overpay its CEO do it?