[dbcfd]

It provides a proxy to whether the management is looking to increase worker morale and productivity for long term gains, or inflate stock prices for short term gains. It also provides a way to compare companies within an industry, to see which might be overpaying management, with stock returns varying accordingly.

[austenallred]

By median pay of other employees?

OK, so McDonalds is 10,000:25,000,000

Now what?

[dbcfd]

So Burger King has a ratio of 10,000:30,000,000, but it has a lower profit margin. Shareholders can then push for a change to compensation, since their CEO is likely overpaid, or their workers are underpaid.