The Wrong Way to Target Corporate Excess - WSJ

Capping executive pay at a certain ratio would raise problems too. Consider two similarly compensated CEOs, Daniel O’Day of Gilead Sciences and James Quincey of Coca-Cola. Mr. O’Day makes 76 times his average employee’s pay while the slightly lower-paid Mr. Quincey makes 1,621 times as much, according to executive compensation tracker Equilar. People who make and distribute soft drinks tend to earn a lot less than scientists so the ratio is skewed, but Mr. Quincey’s company earns more profit. Enforcing pay ratios would send the top executive talent to investment banks, software companies or biotech firms instead of retailers, trucking companies or restaurant chains.