> You're heavily penalizing CEOs who lead companies with low median wages.

I have a feeling that this is the entire point.

edit: to be clear, I disagree with it because it's a terrible way to measure what I think OP is trying to measure. As another commenter mentioned, this simple ratio doesn't tell the whole story.

So whether or not a CEO is "overpaid" depends on their business model?

Hire a part-time janitor at $15k and you look like Mr Burns, but out-source it so your next lowest paid employee is making $150k and you look like a saint.

But nothing's change with how much the CEO is paid.

Correct, and that's the entire point.

I think what you're missing is that this particular metric doesn't care about performance of the company or if the CEO "deserves" that much money or not, and that's by design. When people compare the pay of a CEO to the pay of their employees it's typically because the entire point of the comparison is to to draw judgement on the CEO's business model.

For example, a common example where this metric is used is to cast judgement on the owners of Walmart for being multi-billionaires while their employees make near minimum wage. The point is not to say anything about the specific performance of those owners or of the employees (and often intentionally ignores it as a factor), but rather to specifically call attention to the disparity in distribution of wealth within the company and to cast judgement on the business model where one person gets rich while depending on the work of people who remain poor.

Again, I don't agree with the use of this tactic to measure anything. I'm just explaining why its done.

I would go a step further and say this is an actively harmful way to measure CEO pay since it further incentivizes reducing the number of low paid full time employees in favor of contract workers or complete outsourcing of that work. Both those options would likely lead to worse overall compensation for low paid employees.

It doesn't really prove anything. No one expects Walmart to pay the average employee as much as Facebook. Makes for some political rhetoric but nothing insightful

I didn't realize Sundar makes so much at Google. It's pretty mind boggling.

It's a bad point.

Why is it more ethical to outsource low paying work to vendors to get it off payroll?

The minimum wage hasn't increased since the 80s (when you take the inflation adjusted numbers). The lower the median wage, the higher likelihood of tax payers subsidizes for the lower "half" at the direct benefit of upper "half."

Not saying this is the only point just that outsourcing isn't the only issue here.

Precisely.

> You're heavily penalizing CEOs who lead companies with low median wages.

Which would make CEOs who outsource lower wage work to vendors and contractors look better.

An aside, but I wonder if the political messiness of low wages is already encouraging this.

Not a bad metric. Of course there's alot of ways to slice it, but if you compare the millionaire landlord of say low income housing vs the owner of high income housing - same income - people do look down on the 'slum lord'.

Someone making $10m per year paying poverty wages (infer they are getting rich by paying poverty level wages) is going to be judged differently by people then the CEO paying $200k median.

How would you rank them instead?

I would say that a CEOs salary should be based on: 1) the level of responsibility (how big is the company), 2) the CEOs performance (is the CEO improving performance).

Compare to national or worldwide median wage.