In the context of rising costs of living with more and more ordinary workers struggling to make ends meet this is a question many would be likely to ask.
FTSE 100 data shows CEO pay and bonus packages average £3.4m each which equates to 103 times the £33,000 average salary for full-time UK workers.
But according to a recent survey by the High Pay Centre, more than 60 per cent of people think that chief executives should be paid only 10 times the average salary.
So it is fair to ask what makes them worth such enormous sums when Britain’s productivity, judged by output per worker, is 20% to 30% lower than most other industrialised economies.
CEO remuneration packages are made up of a combination of salaries, bonuses, and stock option packages, according to Investopedia.
In theory the package is designed to align executives’ actions with company success, in other words to make it performance related.
However, this only works if the package is reduced when the company is doing less well.
Performance can be gauged by any number of things such as profit or revenue growth, return on equity, or share price appreciation.
But, arguably, using financial metrics and annual share price gains is not always a fair measure of how well an executive is doing their job.
Perceived fair pay depends on many factors, with an important one being company value. If value has increased due to CEO effort, directors and investors believe it is fair to reward the CEO for this increase. Arguably the converse should be true.
But this suggests that company value is entirely within the CEO’s control when in fact other factors such as interest rate rises for example may come into play.
According to the independent Centre for Economic Policy Research (CEPR), however, “intrinsic motivation and personal reputation are the primary drivers of CEO effort. CEOs are intrinsically motivated to do a good job or to be seen by their colleagues, their peers, and wider society as having done a good job”.
CEO remuneration is a complex issue and the concept of fairness is likely to arouse considerable passion on all sides of the debate.