Enter the total annual compensation of the CEO and the median annual compensation of employees into the calculator to determine the executive pay ratio.

Executive Pay Ratio Calculator

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Executive Pay Ratio Formula

The following formula is used to calculate the executive pay ratio for a given CEO compensation and median employee compensation. 

R = C_{CEO} / C_{EMP}

Variables:

  • R is the executive pay ratio
  • CCEO is the total annual compensation of the CEO
  • CEMP is the median annual compensation of employees

To calculate the executive pay ratio, divide the total annual compensation of the CEO by the median annual compensation of employees. This ratio provides insight into the disparity between the highest and median earners within an organization.

What is an Executive Pay Ratio?

The executive pay ratio is a measure that compares the total annual compensation of a company’s CEO to the median annual compensation of its employees. This ratio is used to assess the income disparity within an organization and can provide valuable insights into the company’s compensation practices and overall fairness. A higher ratio indicates a larger gap between the CEO’s pay and the pay of the average employee, which can be a point of concern for stakeholders, including employees, investors, and regulators.

How to Calculate Executive Pay Ratio?

The following steps outline how to calculate the Executive Pay Ratio.

  1. First, determine the total annual compensation of the CEO (CCEO).
  2. Next, determine the median annual compensation of employees (CEMP).
  3. Finally, calculate the executive pay ratio using the formula R = CCEO / CEMP.
  4. After inserting the values and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

Total annual compensation of CEO (CCEO) = $2,000,000

Median annual compensation of employees (CEMP) = $50,000