Articles, Letters April 6, 2014

A Fairer Pay System?

by Kai L. Chan

Letter to the New York Times (April 5, 2014)

To the Editor: Re “Can We Close the Pay Gap?,” by Deborah Hargreaves (“The Great Divide” series, Sunday Review, March 30): One of the problems of tying the pay of chief executives (or other senior management) to that of the typical or lowest paid employee of the company (such as capping C.E.O. pay to 50 times that of the median worker at the company) is that it creates incentives for senior management to artificially elevate the median pay. As Ms. Hargreaves mentions, a greedy C.E.O. could improve his remuneration by outsourcing, offshoring or even eliminating low-paid positions.

A better stick to engender greater social responsibility by senior managers might be to tie their compensation to the national median income. In this way captains of industry — who hold a lot of political sway — are motivated to think about the greater society, and what is good for corporate America would also be good for the nation as a whole.

KAI L. CHAN
Dubai, United Arab Emirates, March 31, 2014

Letter as it appeared in the NYT

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