Are CEOs worth 262 times more than the nice guy in shipping? The headline of this EETimes article "CEOs earn 262 times the pay of workers," says so. Before anyone claims I am socialist liberal who doesn't value the wisdom and leadership that chief executives offer to their companies in exchange for their personal lives, fear of federal prosecution under Sarbox and accountability to every worker and shareholder, I will point to my favorite example, John Mackey. As the CEO of Whole Foods, Mackey is limited to receiving no more than 14 times the pay of an average employee. However, he generally receives more, such as last year when received almost double his pay thanks to a $460,000 "error" approved by the board. A Whole Foods spokeswoman said other lower level employees were also affected by the "error."

Regardless, Whole Foods is a company that has seen its CEO win an Entrepreneur of the Year award, its stock price quadruple in the last four years and consistently is listed as one of the Best Companies to Work For by Fortune. John Mackey is taking on the demands of leadership of a Fortune 500 public company and its attendant sacrifices for options and less than $1 million a year, and succeeding admirably. Granted as the founder of the company, it's personal and not just about the money, but I can almost guarantee that behind him is a successor who has also bought into Whole Foods' culture and would take on the role without needing a multi million dollar pay package.

While I've heard directors on compensation committees extol the wonders of their CEOs and use that to justify their high prices, they seem to be forgetting a cardinal rule of business. Could you get the same quality for less? No manager would dream of going forward with a new hire without a cost benefits analysis, but CEOs are granted compensation packages without such scrutiny. A recent editorial (subscription required) in the Economist argues that part of the problem with soaring executive compensation is too much disclosure. When everyone can see what CEOs make, the temptation to pay your CEO more because they are "above average" rises. After all, that's what the merit system is about. However, I think it has gotten out of hand and boards need to start asking the tough questions. We've already moved into a culture of the irreplaceable celebrity CEO, but I think it's time we went back to paying them for what they really are—not the face of a company on financial news shows, but rather the stewards and visionaries of a business.
—Stacey Higginbotham

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