In 1965, the average big-company CEO in America earned about 20 times what a typical worker made. Today the ratio for the largest firms runs on the order of 300 to 1 — and at the extreme, individual pay packages have hit the hundreds of millions and beyond.
Worker productivity didn't rise 15-fold in the boardroom. Nobody's brain got 15 times bigger. So what changed? The form of the paycheck changed. And that change is one of the cleanest self-dealing loops ever built into a legal system.
Look at the numbers. Then lift your head — and watch the loop close.
Cash vs. stock — the whole trick lives here
A worker is paid in cash. Wage or salary, taxed as income, spent on rent. Linear. Bounded. When the company's stock doubles, the worker's paycheck does not move a cent.
A modern CEO is paid mostly in equity — stock options and RSUs.
- A stock option is the right to buy company stock later at today's price. If the stock rises from $100 to $150, each option is worth $50 of pure gain. If it doubles, the option prints money. The executive's payday is bolted directly to the share price.
- An RSU (restricted stock unit) is a promise of actual shares that vest over time. Every tick up in the stock price makes the whole grant worth more.
So the worker's pay is flat against the stock. The executive's pay is a lever on the stock. Same company, same year — one person's compensation is indifferent to the share price and the other person's compensation is a bet on it, funded by the company.
That difference alone doesn't explain 300x. What explains 300x is the next paragraph.
The loop that pays itself
Read these lines slowly, because this is the whole engine:
- The CEO is paid mostly in stock and options.
- The CEO decides how to spend the company's cash.
- The CEO directs that cash into buybacks — the company buys its own shares, shrinks the share count, lifts earnings-per-share, pushes the price up.
- The higher price makes the CEO's options and RSUs worth dramatically more.
- The CEO sells into the rally the buyback created.
The person who sets the pay-in-stock also controls the lever — the buyback — that raises the stock. Payout tied to the price, and hands on the pump that moves the price. That is not a salary. That is a legal, self-reinforcing loop for converting corporate treasury into personal fortune.
This is why executive pay decoupled from anything resembling contribution. It stopped tracking how well the company serves customers, treats workers, or builds for the future. It started tracking one number — the share price — which the same executives learned to inflate on command. Pay the boss in the very thing he can pump, then hand him the pump. Of course the ratio exploded.
And the biggest outside shareholders — the index behemoths, BlackRock and Vanguard, holding meaningful stakes in almost every large public company — vote to approve these pay packages year after year. The system's largest owners bless the loop, because a rising share price serves them too.
The board is not a check — it's part of the loop
You might think: doesn't someone approve this? Yes. The board of directors. The compensation committee.
But directors are often other executives, nominated with management's blessing, paid handsomely for a few meetings a year, advised by compensation consultants hired by management. The consultants benchmark each CEO against "peers," and no board wants its CEO paid below the median — so every raise ratchets the median up, and next year everyone benchmarks to the new, higher median.
It's a positive feedback loop with no damping. An amplifier wired into its own input — turn it on and it screams toward the ceiling on its own. That's the ratchet driving pay from 20x toward 300x and beyond, decade over decade, in a mechanism with no natural brake.
Our record
On the Scales of Maat, weigh it.
The worker converts hours of his one life — his Sekhem, his living force — into a fixed wage that does not share in what he builds. The executive converts a signature into equity, then uses the company's own cash to inflate that equity, and cashes it into a fortune. One creates the value and is paid a flat rate to leave it behind. The other steers the value upward and is paid a lever to capture it.
This is Isfet in its most elegant form: a pump that runs upward, drawing the collective force of everyone in the building into the hands of the few who hold the options and time the sale. It generates no new Sekhem. It only reroutes the flow — and the ones who wrote the routing rules sit at the top of the pipe.
Name the loop — and "pay for performance" reads correctly: pay for pumping.
The lever back
Never doom without a door.
The 300x ratio isn't a law of nature. It's the output of a specific, nameable machine: equity pay plus buybacks plus a captured board, running with no brake. Every part of that machine was built. Every part can be unbuilt.
See your own pay clearly. If you're paid in cash while the people above you are paid in equity they can inflate, you now understand exactly why their number moves and yours doesn't. That's not your failure to negotiate. That's a structural difference in the kind of money you receive. Where you can, get a piece of the upside — profit-share, real equity, ownership — not just a flat wage against someone else's lever.
Refuse the pay-ratio economy as inevitable. There's nothing sacred about a structure where the person who steers the value captures 300 times the person who creates it. Cooperatives cap or share the spread by design. Worker-owned firms can't run the loop, because the workers are the owners — there's no "them" to route the treasury to. DAOs put compensation on-chain, readable by everyone, un-ratchetable in the dark.
The loop that pays the boss 300x is a program. Programs can be forked.
Fork it so the value returns to the ones who made it. That's the lever. Pick it up.