BBC: Why CEOs make so much money
February 2, 2021
By Peter Yeung
The executive pay gap has its roots in the policies put forth in the 1980s by the Reagan administration in the US and the Thatcher government in the UK. Their political philosophies drove deregulation, privatisation of the public sector and free-market capitalism. Both also took a dim view on labour unions, which ultimately played a role in these organisations’ reduced capacity to advocate for workers.
Robin Ferracone, CEO of Farient Advisors, an international executive-pay consultancy, agrees with these “price-driven” salaries. “If you have a good CEO, the multiplier effect can be huge,” she says. “So, in principle, median pay for median performance and high pay for high performance makes sense.”