Bauer Business Focus

CEO And Worker Pay Disparity

Guest: Professor Steve Crawford

A government policy is shedding light on the difference in CEO pay and what the average employee earns. Professor Steve Crawford with the Bauer College of Business at the University of Houston explains how that gap impacts business.

“In 2017, companies began disclosing median worker pay and the accompanying pay ratio – the ratio of CEO compensation to median worker pay. These disclosures came as a result of a new SEC regulation. Many companies disclose high pay ratios indicating significant pay disparity between the CEO and workers.”

“Many view this disparity as indicative of the inequality that exists in our society. However, shareholders only seem to express displeasure with the pay gap in the most extreme cases, suggesting that the disclosure may instead motivate employees and have a positive impact on firm performance.”

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