Fed Member Thinks CEOs Are Overpaid

Sep 12, 2002

Reuters has reported that William McDonough, president, New York Federal Reserve, has called on corporate executives to take voluntary cuts in pay to benefit shareholders and strengthen the United States’ economy.

“Beginning with the strongest companies, CEOs and their boards should simply reach the conclusion that executive pay is excessive and adjust it to more reasonable and justifiable levels,” McDonough said.

McDonough pointed to the growing discrepancy between the pay for chief executives and production workers to support his views. Chief executives in publicly-traded companies now make approximately 400 times what production workers earn. This stands in sharp contrast to just two decades ago when the ratio was 42:1.

Moderator’s Comment: Is top executive pay too high?

Mr. McDonough is right. It’s time for a change. Of course,
we don’t imagine that we will actually see any change. How many of those currently
unemployed would be working if the exec to worker pay ratio was 42:1 instead
of 400:1? [George
Anderson – Moderator

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