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No, setting a maximum limit for CEO salaries will accomplish little and do a great deal of harm in the long run.

Let's say, for example, that America's auto industry is failing and Ford needs the most brilliant CEO in the country to steer the company, and the industry, back to success. But, Mr. Brilliant, who is only 35 years old, is already earning the maximum allowed CEO salary guiding a telephone company to excessive profits. He's already guided that ship through the rough waters, and now all he has to do is maintain the course. Why would he jump ship, only to make the same salary and deal with more grief?

What would make a great deal more sense, economically and financially, would be to set a minimum amount that any company can pay it's lowest hourly wage earner, based on the maximum amount the company is willing to pay it's CEO. However, I firmly believe that there should be a minimum limit for hourly employees based on a percentage of the maximum CEO salary.

Tying the minimum amount a company can pay it's lowest level employee into the maximum amount the company choses to pay it's highest level employee will create some kind of reasonable equity which will inspire a collective effort between the executives, the mid-level managers and the production staff.

Think about it. Under the current system, a new CEO is hired at an obcene salary with tons of perks and benefits. To support his delicious salary, that CEO has to make the company more profitable, so the first thing that CEO will do is look for a way to replace the hourly workers through offshoring, outsourcing, or increasing the employee portion of healthcare costs, while freezing or reducing the other benefits.

This creates a hostile and defeated workforce that is less productive. Why would the mail room clerk want to become more efficient, if his/her efficiency is rewarded by decreased work hours and less pay, while the overpaid CEO gets more bonsuses?

But, if we re-structure things and force companies to treat all employees as valuable assets by tying hourly wages and benefits at the lower end of the scale into the salaries and perks of a CEO, we would create a workforce that would be united. Heck, if the top dog is making $5 million and he's guaranteed a $2 million pay increase if he can reduce operating costs and you're a production worker guarenteed to make atleast 5 percent of the CEO's base salary, wouldn't you try to reduce operating costs too?

I say let the Board of Directors decide how much they want to pay a CEO, just make sure everyone else down the line shares the wealth. This will decrease waste and increase productivity. The stock values increase. The wages at all levels increase. The economy wins.

But, if you cap at the top, we will have multi-billion dollar corporations with idiots in charge. (Kind of like our current United States administrative structure.) I say let the cream rise to the top, just make sure that the milk supporting the cream is equally compensated.

Learn more about this author, Sherry Rindt.
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