October 16, 2021

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Are C.E.O.s Paid Too Much?

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What do you notice about this graph? What do you wonder?

In “C.E.O. Pay Remains Stratospheric, Even at Companies Battered by Pandemic,” David Gelles writes that some of the same companies that laid off thousands of workers during the pandemic still paid their C.E.O.s handsomely:

Boeing had a historically bad 2020. Its 737 Max was grounded for most of the year after two deadly crashes, the pandemic decimated its business, and the company announced plans to lay off 30,000 workers and reported a $12 billion loss. Nonetheless, its chief executive, David Calhoun, was rewarded with some $21.1 million in compensation.

Norwegian Cruise Line barely survived the year. With the cruise industry at a standstill, the company lost $4 billion and furloughed 20 percent of its staff. That didn’t stop Norwegian from more than doubling the pay of Frank Del Rio, its chief executive, to $36.4 million.

And at Hilton, where nearly a quarter of the corporate staff were laid off as hotels around the world sat empty and the company lost $720 million, it was a good year for the man in charge. Hilton reported in a securities filing that Chris Nassetta, its chief executive, received compensation worth $55.9 million in 2020.

The coronavirus plunged the world into an economic crisis, sent the U.S. unemployment rate skyrocketing and left millions of Americans struggling to make ends meet. Yet at many of the companies hit hardest by the pandemic, the executives in charge were showered with riches.

The divergent fortunes of C.E.O.s and everyday workers illustrate the sharp divides in a nation on the precipice of an economic boom but still racked by steep income inequality. The stock markets are up and the wealthy are spending freely, but millions are still facing significant hardship. Executives are minting fortunes while laid-off workers line up at food banks.

The article continues:

The gap between executive compensation and average worker pay has been growing for decades. Chief executives of big companies now make, on average, 320 times as much as their typical worker, according to the Economic Policy Institute. In 1989, that ratio was 61 to 1. From 1978 to 2019, compensation grew 14 percent for typical workers. It rose 1,167 percent for C.E.O.s.

The pandemic only compounded these disparities, as hundreds of companies awarded their leaders pay packages worth significantly more than most Americans will make in their entire lives.

Students, read the entire article, then tell us:

  • Do C.E.O.s make too much money? Do you think their pay is too high relative to that of the average worker? Why or why not?

  • In your opinion, what factors should determine an employee’s pay? To what extent do you think there should there be differences in pay between workers? How big should those differences be, and upon what criteria should they be based?

  • Do you think executives who made more money during the pandemic were justified in doing so? Why or why not?

  • What do you know about how wealth is distributed in the United States? Do you think C.E.O. pay should be reconsidered in the context of stark wealth and income inequality and pay gaps along racial and gender lines? (For example, a 2020 New York Times review found that of the people at the top of the 25 highest-valued companies in the United States, only six are Asian or Black; all of them are men.)

  • Do you think income inequality is a problem? Why or why not? 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?

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Students 13 and older in the United States and the United Kingdom, and 16 and older elsewhere, are invited to comment. All comments are moderated by the Learning Network staff, but please keep in mind that once your comment is accepted, it will be made public.

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