THE LEX COLUMN: US pay ratios not a reliable reflection
Comparing CEO salaries with those of employees does not tell the whole story
Sometimes a denominator is more interesting than the ratio of which it is part. Reforms at the end of the crisis era required public US companies to publish the ratio of CEO pay to that of the median worker. Executive pay was already a mainstay of annual proxy filings. The ratio was instituted to shame companies whose bosses make a packet relative to ordinary line workers. A few years into this process, the shortcomings of this measure are becoming clearer. One benefit is a better understanding of which industries pay relatively well at a given moment — by looking at median salaries — and what that says about the drivers of an economy. A Stem (science, technology, engineering or maths) degree pays off? Seemingly so. The median pay at semiconductor company Broadcom is $201,000. That is the highest among 100 large groups that have so far disclosed pay ratios, according to research firm Equilar. But the explosion in US energy production has been good for roughnecks in oil refining too....