1In 2004 the ratio of chief executives’ compensation to the pay of the average production worker jumped to 231 to one.
2If wages overall had risen at the same pace as that of CEOs since the 1980s, the average worker would today be earning more than $84,000 a year.
3Michael Eisner was paid $800 million over a 13-year-period during which the company’s shareholders would have done better by investing in Treasury bonds.
4Compensation is the total of all rewards provided employees in return for their services.
5Direct financial compensation consists of the pay that a person receives in the form of wages, salaries, commissions and bonuses.
6Indirect financial compensation consists of all financial rewards that are not included in direct compensation.
7Nonfinancial compensation consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works.
8Equity theory is the motivation theory that people assess their performance and attitudes by comparing both their contribution to work and the benefits they derive from it to the contributions and benefits of comparison others whom they select–and who in reality may be like or unlike them.
9Financial equity means a perception of fair pay treatment for employees.
10External equity exists when a firm’s employees receive pay comparable to workers who perform similar jobs in other firms.
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