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    Spread of Pay difference between CEO and lowest ranking employee

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    What do you think should be a reasonable spread (either a dollar amount, XX times more than or percentage number) between the earnings of a firm's CEO and its lowest paid hourly workers and why? Provide your detailed explanation on this volatile issue.

    (NOTE: Be careful when using percentages. For example, if the lowest paid employee makes $20,000 and you recommend a 100% higher for the CEO, you are only offering the CEO $40,000, and that really isn't reasonable.) I expect for you to suggest a reasonable spread, using either a dollar amount, XX times more, or percentage amount, and to not simply tell me that it isn't possible to do so!

    NOTE: DO NOT suggest an hourly pay for the CEO, as he/she is a salaried person, as are all management personnel of a firm.

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    Solution Preview

    There are a few views on this:

    If a CEO wants to be "responsible" then the rule of thumb should be that the CEO earns 50 times more then the lowest paid employee.

    So if the lowest employee makes $20,000, the CEO would make 1,000,000.


    Other views say that the spread should be 25 times. According to this website, if that worker received the minimum ...

    Solution Summary

    The spread of pay difference between a CEO and the lowest ranking employee is determined. The expert determines the reasonable spread is between these two.