CEO pay is tied to company performance, study shows

Some of the companies with the largest gap between average worker pay and CEO pay may be running their businesses more effectively than others, according to a July 30 study from The Wall Street Journal.

They analyzed over 800 U.S. public companies on key aspects of their businesses, including customer satisfaction, social responsibility and employee engagement and development. Each company was given a ranking for performance and effectiveness based on the sum of these factors, which the researchers then used to investigate whether there was any connection to CEO pay and worker pay ratio. 

They found that the higher the ratio between CEO and worker pay, the higher the company performance in their rankings. The companies in the highest quartile of CEO pay ratio had an average performance score of 57 out of 100, compared to those in the lowest CEO pay quartile who had an average performance score of 50.2 out of 100.

"Corporate success should not be confused with corporate effectiveness at solving society's deepest challenges," said Miguel Padro, assistant director of the Aspen Institute's Business and Society Program, in response to the findings. "We may have really well-run big businesses while society comes apart because of polarization, massive inequality and widespread mistrust."

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