Income Inequality and Executive Compensation

Permit me to highlight one of the most controversial topics that has attracted so much global attention among world leaders - income inequality. In recent times, the Prime Minister of the United Kingdom, Theresa May questioned the logic behind executive compensation and shared a new thinking that employees should have a say in how much executives are paid. She bluntly supports employee representation on boards. According to Prime Minister May, there is the need to include and allow employee and consumer representatives to sit on company boards, and make shareholder votes on executive pay legally binding. “It is not anti-business to suggest that big business needs to change,” she said. She expressed worry that the ratio of the executive compensation to least paid worker which stood at 1:150 had received a pay adjustment of about 47% in an economy where CPI is less than 2%. This followed her address at the annual breakfast meeting with the Confederation of the British Industries. Similarly, during the recent US election, the issue of executive compensation was a topical view shared by both Hillary and Bernie Sanders of the Democratic Party. According Hillary, it takes three hundred (300) Americans working for a solid year to make as much money as one top CEO. Sanders on the other hand lamented that “CEOs make 300 times what their workers make. That is simply immoral and must be dealt with.” This clearly explains the fact that strong leaders with conviction are and will continue to challenge the notion behind the “irrational executive compensation logic” as well as the need to bridge the huge income inequality gap in order to prevent a potential class warfare. Similarly, the Ghana Mineworkers’ Union promises its members never to end the struggle until managers of business desist from their ill-informed thinking to that which appreciate equity conscience.

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