In recent years, considerable controversy has swirled around the issue of executive pay. With top executives of large companies getting 400 times more pay than the average employee, it's no wonder -- especially since top executives in Japan and Germany receive only 20-40 times average pay. Is anyone really worth this much?
Defenders of this system, including the CEOs themselves, point to the free market and tell us that's what it takes to attract and retain these exceptional people. Athletes earn even more, they point out. Of course, no one can really spend the huge fortunes these CEOs accumulate, but that isn't the point. Money, we are told is a measure of their worth; a way of keeping score. CEOs can hardly accept a paltry few million a year when their peers make so much more.
There is a solution to all this. I take the CEOs at their word that it isn't about having more money, but about prestige and competitive pride. On the other hand, I am sympathetic to the argument that if a CEO makes 400 times the pay of an average employee, the company could hire 380 more people by reducing that ratio to 20:1. And since these high ratios often apply to other top executives, a large company could hire hundreds more people by ratcheting all executive pay down.
To make both sides happy, we should first reduce top CEO pay to 50 times the compensation of top employees. Other executives should be limited to 15-20 times pay. The free cash flow that results could then be applied to the cost-effective replacement of their damaged self-esteem through the employment of Adulation Specialists. These professional adulators would include portrait artists, dramatists, poets, song writers, musicians, comedians, biographers, tapestry weavers, and other artists and artisans who would devote themselves to celebrating the achievements of our illustrious executives. In so doing, we would create thousands of new jobs, and might even be able to abolish the National Endowment for the Arts because so much money would be flowing to the arts community.
Today, we revere the artistic accomplishments of the Renaissance. But let's remember how this was created. It was professional adulators, of course, who supplied the very rich with much needed self esteem in return for a meager share of their earnings. Think about it, we can create our own Renaissance. Our grandchildren will thank us. I an certain this solution will work. My adulators tell me so.
GUEST BLOGGER -- Corey Rosen is executive director and co-founder of the National Center for Employee Ownership (www.nceo.org), a private, nonprofit membership, information, and research organization focused on broad-based employee ownership plans. He is the author or co-author of over 100 articles and numerous books on employee ownership. He has appeared frequently on CNN, PBS, NPR, MSNBC, and is regularly quoted in The Wall Street Journal, The New York Times, and Business Week.