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When salary packages for CEOs become way too high

According to prospects.ac.uk, the typical starting pay for a drilling engineer is £25,000 to £35,000 and with experience, it can grow to between £40,000 and £80,000. There’s no need to convert to RM because the average property price in London is £500,000 anyway. In other words, even for an extremely experienced drilling engineer who is already earning more than majority of his peers in the engineering field, he will still find it tough to buy a unit if he intends to stay in London. How’s this compared to a CEO’s pay in BP? Well, for the year ending 2015, its chief executive Bob Dudley should receiving US$20 million (£13.72 million). This is around 172 times more than a very experienced drilling engineer who would most probably face much higher work hazards than him.

First, CEOs should earn much higher pay, that’s for sure. That’s because he is using his brain extensively and the number of people who could do a CEO’s work is really not as many as a drilling engineer. Then, how much should the “higher” be? Before we jump at BP’s CEO, there are CEOs earning by far higher than him. Let’s look at some stats by Glassdoor which was published in Huffingtonpost.com   It revealed that the average pay gap for the CEOs of major U.S. firms versus the median worker’s pay is 204 to 1. Note, MEDIAN pay is definitely higher than the salary of the lowest paid worker. Well, this is not all, there were four CEOs earning more than 1,000 times the salary of their median worker. The full article is here.

Coming back to BP’s CEO. He will be receiving 20 percent more in 2015 compared to 2014. Due to the low oil price, 5,000 workers lost their jobs in BP last year. BP also reported a US$6.5 billion loss in 2015. Well, the shareholders voted against the pay package and it will be considered seriously by the company’s board. In the U.S., one of its President hopefuls, Bernie Sanders said, “The decision to require companies to disclose how much more CEOs are paid than workers is an important step in the fight against income inequality.” I think this is necessary because once all these information are transparent to all, companies would behave better. I still believe CEOs deserve much higher pay but between £13.72 million vs £7 million, the CEO would still be enjoying majority of whatever he intends to do….. Okay, now let’s try our best to become a CEO with a multinational organisation in our career. Majority would be ecstatic with just RM2 million pay per year…..

written on 28 Apr 2016

next suggested article:Starting with a peanut salary, think ahead.

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