Public companies in America are required by law to publish one number: the ratio between what it pays its CEO and what it pays its median worker. The rule has been in force since 2017. The number sits in every proxy statement on the exchange.
Most leaders cannot tell you their own.
When you do look, the numbers are not subtle. The average across the S&P 500 was 285 to 1 in 2024. At the hundred lowest-paying large firms it averaged 632 to 1. At Starbucks it once reached 6,666 to 1. In 1965 the same ratio was about 21 to 1.
The easy way to read these stats is moral. A company that pays its CEO 285 times its lowest worker has decided some people are worth 285 times other people. That frame feels true, and it ends the conversation. It puts horns on one side and a halo on the other, and nobody on the inside recognizes themselves in it—because who wants to identify with horns?—so nothing changes.
Here is the more useful read. The number is the sum of compensation decisions made one at a time by people who were mostly not thinking about the ratio at all. Yet, even if the ratio is the result of several decisions compounding rather than a deliberate choice, it is a powerful indicator of a company’s culture.
So why don’t we change it?
The easy answer is that the people setting the ratio benefit from it. For boards, that is mostly not true. Directors are not protecting their own pay when they approve a CEO package. They are trying to land the person they believe will make the company worth more. And they set that number the way almost every board does. They pull comparison data. They look at what peer companies pay their CEOs. They land near the middle, because nobody wants to explain why they paid below market for the person who runs everything.
The flaw is built in because the benchmark only ever compares CEO pay to CEO pay. No one in that room compares the ratio to other ratios.
It is a habit that shows up everywhere people set pay. We benchmark the top against other tops and we never benchmark the relationship between the top and the bottom. The ratio is the one number nobody’s job is to look at.
But it doesn’t have to be like this.
Mondragon, the cooperative federation in the Basque region of Spain, caps the ratio between its highest and lowest paid to six. It employs tens of thousands of people. It has run for roughly seventy years. It is profitable. It has outlasted recessions that took down conventional firms. The cap is not charity. It is a design choice that someone decided to benchmark and defend.
You can make the same choice with one question.
What ratio between your highest-paid and lowest-paid employee would you defend in writing, with your name on it, to your entire workforce?
If you do not know your current ratio, that is information. If you know it and would not defend it openly, that is more important information.
A ratio you will not say out loud implies you are hiding something.
People are not asking to earn what you earn. They never were. Decades of research on workplace fairness land in the same place. People will live with a gap, even a wide one, if they believe the process behind it was honest and someone can explain it without flinching. What they will not forgive is a number no one will account for. When the reasoning is missing, they do not assume the best. They fill in the blank, and they fill it in against you with distrust, fear, and anxiety.
A ratio you can defend out loud is, by definition, a ratio your people can live with. Those are the same number. Fairness was never sameness. Fairness is a gap somebody is willing to put their name on.
The architecture is the problem. That is hard to accept, because architecture feels permanent and blaming individuals feels more satisfying. But a system that was designed can be redesigned.
