May 21, 2015

Limit tax deductibility on what is paid to a CEO, to 10 times the average salary. That sends a discreet social message.

Sir, I refer to Michael Skapinker’s “It is time for a brave CEO to ask for lower simpler pay” May 21.

Skapinker is of course right in his wishes… also because I believe it is very useful for a company to attract CEOs that do not give the factor of financial remuneration an importance weighting of, let us say, more than 50 percent.

But why not also help “the brave CEOs” to make up their mind. For instance what about limiting the tax-deductibility for the company of all salaries and bonuses paid to the CEO to 10 times the amount of the average (or median) salary paid in the company? That should be a good place to start sending out a discreet social message to corporations and their shareholders alike.

As compensation above that limit would be made with after tax profits that would stimulate everyone to make really sure the CEO has really earned it.