27% Pay Hike, Do CEOs Really Deserve It?

Are CEO worth it?
CEO worth it?

By noon on January 3, 2012, most Canadian highest CEOs would have made what the average worker makes in a year.

According to the Canadian Centre for Policy Alternatives http://www.policyalternatives.ca/ , the top 100 CEOs were paid on average $8.4 million dollars, an increase of 27 percent over the previous year. While the average Canadian worker made just $44, 366, a 1.1 percent increase from 2009.

The Canadian Centre for Policy Alternatives’ annual look at CEO compensation looks at 2010 compensation levels for Canada’s highest paid 100 CEOs and finds they pocketed an average of an average $8.38 million in 2010 – a 27% increase over the average $6.6 million they took in 2009.

Even in these turbulent economic times, the average of Canada’s CEO Elite 100 make 189 times more than Canadians earning the average wage.

Source: Canadian Centre for Policy Alternatives Policyalternatives.ca

The question in most people’s minds is “How do I get that kind of job?” Well, there are the most obvious answers: good education, experience, hard work and long hours would be the most cited answers by the compensation firms that recruit these CEOs.

However, a lot of people would question whether these CEOs really deserve to make this kind of money. Should the CEO’s really be making 189 more times than the average wage?

Studies have shown that a monkey can do as well picking stocks and getting the same return or better compared to an experienced stock picker.

Most people would agree that if a company like Magna, founded by Frank Stronach, goes public and most investors know what they are buying and understand that this former CEO compensation package is high.  They might say he probably deserves the pay.  After all, he is the patriarch that built a small business into a global automotive powerhouse.

However, the problem starts with CEOs who are hired to lead and build wealth for a company and failed miserably and still managed to be excessively rewarded. People have a problem with this kind of behavior that is pitting the average worker versus the CEOs.

The top CEOs should be making only five to the most ten times what the average worker makes.  Anything above that then they are just enriching themselves in an elaborated game perpetuated by the board and compensation firms.