Do we REALLY need to pay the CEO 200x higher than the median salary of an employee?

Do we REALLY need to pay the CEO 200x higher than the median salary of an employee? (Malaysia not yet this number I think… fortunately)

Median Remuneration of all CEOs were RM0.95 million per year in 2018 (Malaysia)

“After our analysis of the compensation paid to the board of directors (BODs) of Bursa Malaysia-listed companies relative to the companies’ financial performance, this week, we zero in on CEO compensation for 2017. The median remuneration of all CEOs was RM0.95 million a year while the average was RM2.28 million a year. .” “For 42 GLCs, the median remuneration was RM1.8 million and the average was RM3.8 million. .” Source: https://theedgemalaysia.com/article/are-ceos-overpaid

CEO were paid 344 times as much as a typical worker vs 21 times in 1965 (America)

“Cumulatively, however, from 1978–2022, top CEO compensation shot up 1,209.2% compared with a 15.3% increase in a typical worker’s compensation. 

In 2022, CEOs were paid 344 times as much as a typical worker in contrast to 1965 when they were paid 21 times as much as a typical worker. ” Source: https://www.epi.org/publication/ceo-pay-in-2022/

Median worker will need 200 years to earn one year salary of their CEO

“The median pay package for CEOs rose to $16.3 million, up 12.6%, according to data analyzed for The Associated Press by Equilar. Meanwhile, wages and benefits netted by private-sector workers rose 4.1% through 2023..” “At half the companies in this year’s pay survey, it would take the worker at the middle of the company’s pay scale almost 200 years to make what their CEO did. Source: https://apnews.com/article/ceo-pay-compensation-ratio-workers-fa25db3338b68ad9eb395dfd46190383

This CEO received a payout of US$56 billion.

“Tesla shareholders vote to reinstate Elon Musk’s $56 billion pay package.” Source: https://www.cnbc.com/2024/06/13/tesla-shareholder-elon-musk-pay-package-at-annual-meeting.html

Median wage for a working Malaysian is RM2,600

“Median wages for formal workers in Malaysia rise to RM2,600 in September. Here is that source: https://www.nst.com.my/business/corporate/2024/01/1005130/median-wages-formal-workers-malaysia-rise-rm2600-september

1 percent of a few million beats 10 percent of a few thousands

If the median salary of a typical employee in Malaysia is RM2,600 and the person gets a 10% increment (which is considered high), then it’s an extra RM260 per month. If a CEO is currently earning RM100,000 per month, a 1 percent increase is RM1,000. Despite just a 1 percent increase, this CEO’s increment is 285 percent higher than the employee who received a 10 percent increment.

I know, someone would like to point out that there is just ONE CEO but there could be 500 other employees with a RM2,600 pay. Thus it would be RM2,600 x 10% increment x 500 workers = RM130,000. Just need to note that MOST organisations in Malaysia do not have 500 workers yeah. So, go think about it very seriously.

Also… the CEO with a RM100,000 monthly pay already can afford to do anything and everything which a common person wants to do. This includes flying business class for vacations and also a 5-star hotel stay during the vacation too.

Meanwhile the employee with a RM2,600 salary would definitely be struggling to pay all the necessary expenses, bills and if they have children, then it’s going to be a stretch.

Do we REALLY need to pay the CEO 200x higher than the median salary of an employee?

If the CEO only become the CEO at the age of 40, then they mayearn RM1 million x 20 years (until they retire). This is RM20 million of base pay and also another RM2.4 million from the employer’s EPF contribution. We have yet to calculate all the rest such as EPF dividends… and also potential bonus… additional increment…

The fact is that when CEOs go on a business trip, all are also covered by the company and more. I think it’s a very healthy number already and it is not necessarily for the CEO to own a few sports cars for example. Perhaps I am just dreaming since CEOs always have a much higher negotiation power than an average employee. All the best to my dream then.

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