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Bringing CEO pay back to earth

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in Best-Practices Leadership,Leaders & Managers

A better future for America includes a retooling of the CEO pay machine that now includes salary, stock, options, “non-equity incentives” and other perks—in other words, a machine out of sync with employee compensation.

In 1978, in an era when leaders observed a code called “internal equity,” CEOs averaged 30 times the wages of the average employee. Now they get 276 times as much, on a status-seeking race with “peer CEOs.” Even when performance targets aren’t hit, boards often reward the chief executive anyway.

In a better future, with a return to some sense of internal equity, CEO compensation packages would be simplified, pay downsized and incentives tied to companies’ long-term success.

— Adapted from The CEO Pay Machine, Steven Clifford, Penguin Random House.

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