Labor Arbitrage in the C-Suite

Ann All

Turns out labor arbitrage isn't just an issue at the low end of the pay scale.

 

As News.com reports, companies based in China and India could get a financial leg up as they enter Western markets because they pay their top executives far less than the sometimes inflated salaries of their American competitors.

 

A Forbes survey found that CEOs at large American companies earn, on average, $3.3 million in annual compensation. Contrast that with China's SunTech Holdings, one of the world's biggest manufacturers of solar panels, where "there aren't 10 executives in the company that make more than $200,000," according to its VP of business development.

 

It's not as if American companies even get what they pay for. A study from executive compensation consultancy DolmatConnell & Partners found an inverse relationship between the compensation of high-tech CEOs and the financial performance of the companies they are paid to lead.



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