Most discussions about CEO pay focus on either the dollar amount or the ratio of CEO Pay to average

pay. These may be relevant numbers but are hard for the average worker to relate to.

A good and graphic way to evaluate and judge the CEO pay is to:

For a specific PREVIOUS corporate fiscal year,

1. determine the salary paid to the CEO

2. determine the net cost of any benefits

company limo

corporate extras( attending seminar in Bermuda in winter)

health care extras

etc.

Add 1 to 2.

This is the total cost(excluding buyouts and other "parachute clauses"

Do this calculation for all top level company officers.

Add them all up.

Call this the total previous year EXECUTIVE compensation.

3. determine the total corporate payroll costs for all employess, including CEO and company officers

for the previous fiscal year.

4. determine the total cost of benefits for all employees

Add them all up

Call this the total COMPANY compensation.

Then,

5. calculate the ratio of the total EXECUTIVE compensation to the total COMPANY compensation.

Show the results in a PIE chart, and also a BAR graph

6. calculate the ratio of the total EXECUTIVE compensation to the the gross sales revenue.

Show the results in a PIE chart, and also a BAR graph

7. calculate the ratio of the total EXECUTIVE compensation to the PREVIOUS years profits.

Show the results in a PIE chart, and also a BAR graph

I believe that if these figures were calculated for the Fortune 100 and the current

Bailout candidates, all company stakeholders(employees, stock owners, etc.)

would be shocked.

Not to kill or belabor the point, but a few more comments about CEO pay are in order:

The GM executives are claiming that the cost of employee health care adds anywhere from

$ 1000 to $ 3000 to the cost of a car. A better question is how much does the cost of CEO compensation add to the price of a car?

Some economists are in love with CEO pay.

If a CEO runs a company into the ground, then paying the CEO Ten Million Dollars is

a bargain, to get rid of the CEO.

If the company is doing OK, then paying a CEO Ten Million Dollars is a bargain because

the CEO may have saved the company 100 Million Dollars.

So, a CEO can never lose.

Most Economics text books talk about economic ratios, such as Profit to Sales.

I should think that anyone either planning to buy stock in a company or work for

a company should be aware of the ratios that I mentioned in steps 5,6,7.

The ratios should be presented using both PIE charts and BAR graphs.