The New York Times- run Learning Network highlighted
CEO compensation this week in a “lesson plan” for teachers of high school and college students. Within a broader context of
discussing inequality within the US, the article poses questions to students on a series of broad topics:
- Is CEO compensation too high on an absolute basis and relative to their employees?
- How should a company set pay? Is it fair for companies to pay employees different amounts? How big should those differences be, and upon what criteria should they be based?
- Is it justified for some executives to have made more money during the pandemic?
- Is income equality a problem? If so, do you think efforts to close the gap should focus on limiting the income of the highest-paid workers, increasing the income of the lowest-paid, or both?
Perhaps unsurprisingly given the publication, the lesson contains some bias and presents an assumption that CEO pay is excessive. Further, it would have been useful to provide an introduction on the role investors play in executive compensation, as well as discussion of the difference between cash and equity compensation.
Interestingly, the comments from students on the question include an impressive grasp of the subject’s nuance. Most responses indicate that students feel CEO pay is excessive compared to employees, but not all, and only a minority of responses indicated the government should work to cut CEO pay. Rather, it was common for the comments to advocate for workers having more earning opportunities.
Though companies may see little benefit in discussing CEO pay outside of shareholder engagement, it is worth providing perspective on such topics: engaging with students on how employees are hired and compensated, how that changes as a career progresses, and what factors or trends influence executive compensation in the US versus other global markets.
