CEO Compensation Comparison Lacks Perspective

As a union tries to make CEO pay an issue, others question the comparison.

Economist Antony Davies said that if McDonald's were to not pay its CEO or all senior management and instead divide those tens of millions of dollars among the minimum wage workers, each employee would end up earning about 1.5 cents more per hour.

But some groups are using executive compensation to try and drive a public discussion. The AFL-CIO launched a website that is critical of some salaries, including the heads of some Michigan companies.

The union reports that a minimum wage employee would have to work 528 hours to equal one hour of compensation of John A. Bryant, the CEO of Kellogg Company. Bryant holds a bachelor’s degree from Australian National University and a MBA from the Wharton School of Business at the University of Pennsylvania. He lives in Kalamazoo and is a Chartered Accountant of Chartered Accountants in Australia. He serves on the board of directors of three major food organizations. 

His total compensation of $7.9 million is being compared by the union to the earnings of teenagers in high school. MLive picked up on the union website and did a story on it.

Charles Owens, state director of the National Federation of Independent Business, called the union website more class welfare from the liberal progressive front.

“Of course everyone making the minimum wage is just as qualified to run a multimillion dollar company as any CEO,” Owens said sarcastically. “In the quest to make everyone equal, the liberals must eliminate experience, education, risk and talent when comparing salaries and pay. It is highly likely that those in the position of leadership for major companies didn't sit around and wait for the government to give them a raise.”

Davies, whis is an associate professor of economics at Duquesne University, made comparisons of the McDonald's executives and its minimum wage employees.

“Don't confuse the value of functions with the values of the individual people,” Davies said. “McDonald's couldn't operate without a CEO or without people who cook burgers. The job the CEO performs is worth about $10 million annually to McDonald's. The jobs the minimum wage workers perform are worth about $35 billion. So the jobs the minimum wage workers perform are worth around 3,500 times what the job the CEO performs is worth. The kicker is that only one person can perform the CEO job at a time while 1.7 million people can perform the minimum wage jobs at a time. So, on an individual basis, the individual minimum wage workers are worth less than the individual CEO.”