Stop Making CEO Pay a Political Issue

Presidential candidates once campaigned on taxes, government spending, and foreign policy. But more recently, executive compensation has suddenly become a hot topic for winning the public’s approval. In the U.S., Donald Trump has called high CEO pay “a total and complete joke” and “disgraceful,” arguing that CEOs stack boards with their buddies who rubber-stamp excessive pay. Hillary Clinton has lamented that “There’s something wrong when the average American CEO makes 300 times more than the typical American worker.” And in the UK, Theresa May launched her ultimately successful campaign to become Prime Minister with a speech that proposed to curb executive pay. Politicians typically make two suggestions for pay reform. First, to cap, or at least force the disclosure of, the ratio of CEO pay to median employee pay. Second, to put pay packages to an employee vote, or as May suggests, put workers on boards.

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