Pay-Ratio FAQ

What is the relevance of comparing CEO pay with that of the lower pay grades?

Inequality has been linked to social problems that affect everyone in a society, not just the lowest paid. Companies have as much – or more -impact on inequality as governments. Inequality is relational, not absolute in terms of pay. A pay-ratios project reflects this.

Why are you running a pay ratios project and commenting on people at the top? Why not just continue to work with poverty?

Food-charity once ran on the assumption that there was food in the cupboard, but circumstances meant people could not prepare it (through injury or grief for example). Cooked meals were provided

In the 80s and 90s there was a dramatic shift. People who were out of work were able to cook, but the cupboard was empty. Basic food items were provided. 

In recent years our budget advisors and food banks have increasingly been seeing people with jobs and empty cupboards. In-work poverty means social service agencies have to rethink their approach again. However, in-work poverty also means questions need to be asked.

A CEO gets high pay due to their experience, qualifications, and hard work. You get what you deserve.

The ratio between the CEO of a large aged-care facility and the person constantly caring for the elderly is 1:30. The CEO neither works 30 times harder, nor deserves 30 times more than the people looking after the dignity and well-being of our families.

The CEO of the Warehouse makes more in a week than a shop floor worker earns in a year.

It would be very difficult to claim that the levels of compensation are due entirely to how hard people work and what they deserve. Other factors are involved in setting pay.

The goal of companies is to make as much money for investors as possible. That’s just business.

The goal of many companies is to perform well and ethically, returning sustainable profit to the shareholders. Apps like Sharesies have introduced a huge number of people to being shareholders. Many shareholders care about more than a single bottom line. They also care about behaviour, and the communities they live in. A look at pay-ratio change over time is just another measure for shareholders to take into account when providing feedback to companies they invest in.

Senior executives carry personal risk if they are on the board of directors. Surely they deserve good pay?

Most senior executives do a great job. They work hard, manage risk, and like everyone else try to look after their families. Questioning the pay of a CEO on $1.3 million a year when CEOs of similar sized companies are paid $650 000, does not mean we think CEOs should not be paid well. We think the CEOs being paid $650 000 for a similar job are being paid well.

“Priests get paid pretty well and live in bloody nice houses. Wonder what that ratio is?”

The ratio from priest to a minimum paid worker in Aotearoa is about 1:2. The ratio to a Bishop is slightly less than 1:3.  And we agree, they are paid pretty well.

“You should do a report on how much tax churches pay.”

Agreed. At some point we should have a look at the tax paid by all sorts of institutions and companies in NZ. I suspect there will be a few surprises. 

On the subject of tax, in some cases workers are paid so little that they qualify for benefits and subsidies to meet minimum income levels to take part in society. When a company turns $356 million profit,  tax-payers shouldn’t be required to support their lowest paid workers so that they can afford to live and get to work. That is just tax-payers propping up shareholders.   

If we don’t pay CEOs more they might leave.

If you feel you need to pay your CEO another $100 000/year just consider paying the lowest paid workers who also keep the business running another $500/year to keep some sort of balance.