Much of this can be accounted for by the simple fact that the companies have gotten bigger. Top CEOs are in charge of more people than ever before. Walmart has 1.4 million employees; if their CEO makes $35 million that's $25 per employee per year - a penny or so per hour per employee.

If a good CEO's decisions can make the average employee more productive (or less unproductive) by even few cents per hour of employment, he's worth that magnitude of salary when working for a company that big.

If we highlight the CEO-to-employee multiple, companies could game the metric by splitting into smaller companies that are slightly less efficient. For instance, there could be separate regional chains called "Walmart West" and "Walmart East", each with their own CEO who gets paid half as much for doing half as much work. They could even both hire the same guy and have him work both jobs at once, thereby reducing to a previously-solved problem! Or they could actually hire two distinct CEOS, which benefits the employees not at all - in fact, the employee situation might be made worse in various ways by the change - but at least the multiple would officially look smaller so: yay?

Headcount isn't really relevant. My dad was a director (mid level manager) of a government org with something like 1,500 direct reports. He probably made the equivalent of $120k today. I think the salary differential between that gig and a line manager was 30-40%. I manage a big IT organization, manage a huge budget, 50 engineers. I make less than 5x the lowest paid employee. My boss's boss maybe 40% more than me.

The corruption of governance and a sense of entitlement fuels CEO salaries. End of the day, the CEO of WalMart doesn't deliver $35M of value. His decisions have big impact, but there are dozens of people who can make those decisions, and many could do so for far less.

The average CEO makes about the same amount of money as the average dentist. When you get to the big scary numbers, you're talking about the top 100 highest-paid CEOs, not CEOs in general. Out of about a quarter-million CEOS around the country, a very very few of them are managing companies the size of Walmart and it's not at all obvious (at least, not to me) that those few are being overpaid.

> there are dozens of people who can make those decisions, and many could do so for far less.

Sure, or you could make the decisions by having a monkey throw darts at a newspaper for free. The important question is whether those dozens of people earning less would make as good decisions as the one currently doing the job. If the current CEO's decisions are even very slightly better he's worth the money given that level of scale.

Similarly, there are dozens of people who could play basketball for less so there was no need to pay Michael Jordan the big bucks.

Curious what you think about why boards aren't incentivized to reign in CEO salaries. Is it because they all sit on each other boards?

It's a small club, so there isn't an incentive to make waves.

Marissa Mayer is on the Walmart board. H. Lee Scott, former Walmart CEO is on the Yahoo board. Why would Mayer want to make a stink about the Walmart guy's salary, an awkward conversation that would probably lead to a similar awkward conversation when she wants a raise at Yahoo.

The boards that I've seen (at a smaller scale) that work are ones where there is a diversity of interests. The minority political party member making a stink about the majority in a town board. Or the company board where a representative of labor controls a key committee.

Last year, Tim Cook's salary plus bonus was $9 million. But his total compensation was $65 million.[1] So what? Why should I care? That's up to the Apple board to work out with him.

I'm still buying Macbooks and iPhones and iWhatevers for as long as I think they're superior to the competition.

[1] http://www.bloomberg.com/news/articles/2015-04-17/tim-cook-s...

Yet another clickbait headline.

Further down in the article, it says: "Of course, people tend to show more moral gumption in surveys than they do in real life. In part this is because we are dealing with hypotheticals (who isn’t against child labor, in principle?). But also, people don't usually ponder issues of inequality while they’re buying their milk and groceries."

RE value of polls, there's this quote I love:

"[A]s of 2010, only 34% of people polled strongly supported letting homosexuals serve in the military, but half again as many — a full 51% — expressed that level of support for letting ‘gays and lesbians’ serve in the military. Ever since reading that I’ve worried about how many important decisions are being made by the 17% of people who support gays and lesbians but not homosexuals."

http://slatestarcodex.com/2015/04/15/trouble-walking-down-th...

There's a similar gulf between people who support "more government assistance for people on low incomes" (popular) and people who support "more welfare" (unpopular).

I think certain words are given negative/positive associations by the media and those overtones have a lot more impact if you're only spending 4 seconds per question than if you're really thinking about it.

>There's a similar gulf between people who support "more government assistance for people on low incomes" (popular) and people who support "more welfare" (unpopular).

Those are not the same thing, though. Someone with a low income has a job, presumably.

Actually it was "government assistance for the poor" - not low incomes - that rated highly on polls, which presumably includes people without jobs. My mistake.

> who isn’t against child labor, in principle?

Tons of people. They need their children's income.

Maybe in practice, but in principle?

Seriously, virtually no one is against child labor in principle. What people are against is bad jobs. Microsoft didn't put much effort into complying with child labor law (and was therefore generally in violation) because the parents of the children it employed viewed working at Microsoft as beneficial.

I always take $1 as a CEO to show my commitment to taking out all my money with stock options and dividends.

Not sure if that's sarcasm or not and I know that usually appears only in the news about CEO's who get millions that way anyway, but the CEO's of (usually smaller) companies that have the same compensation plan often just get nothing ($1) when they didn't perform because there simply was no profit (so no dividends) and no-one would buy (parts of) shares because they are down (if the company is publicly trading that is quite a bit more complex). So that seems a far more fair way of compensating and paying out millions for the risk.

Im really curious why this matters to so many people. It only matters if you own part of the company and if this is the case, you most likely took part in the decision making process that gave the ceo this dalary.

Because humans are values-driven, and humans make decisions based on their values.

Buying from a company that does not reflect their values is contradictory. The way to reconcile the conflict is with saving money ( and justifying that saved money as a future donation ) OR not shopping at the store that does not match their values.

I for one will never shop at Walmart - no matter how cheap it is.

Won't they just be creating a new company to siphon the money trough ?

What if every employee has a decent salary (70k+) and the ratio is still very high?