The Real Problem with CEO Pay, and Why Young Men Don’t Volunteer Anymore

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2:42media.com or post your question on the Scott Galloway subreddit and we just might feature it in an upcoming episode. Our first question comes from Reddit user Nstigmat and asks, okay, in 2025 CO pay spiked 20 times faster than worker pay. Do you still think there is nothing we can do or should do to regulate this emerging class of oligarchs? I'm not sure I ever said that boss. So, okay, so let's look at the data. According to an Oxfam study, S &P 500 CO pay rose 26 % between 2024 and 2025, while the average hourly earnings for private sector workers rose just 1.3 % in real terms, meaning CEO pay grew 21 times faster than workers' wages

3:23Scott Galloway:in the U.S. alone. The report covered 1 ,500 companies across 33 counties and found that the average CEO pocketed$8.5 million last year, up from$5.5 million in 2019. So some more data. CEOs of major U.S. companies were paid 21 times as much as the typical worker in 1965. That ratio grew to 31 to 1 by 78, 60 to 1 by 1989, and surged to 380 to 1 in 2000 at the height of the stock market bubble. In 2024, it was 281 to 1. CEOs are paid excessively even relative to other high earners. Between 1965 and 1978, the average CEO at a large firm was paid almost three times as much as the average top 0.1 % earner.

4:07Scott Galloway:By 2023, the ratio had risen to 7.5x. I'll just give you some examples. The Starbucks CEO, Brian Nichol, received$98 million in 2024. That's 6 ,600 times more than the medium Starbucks worker. That worker would have had to have started working in 4 ,600 BC just to earn what the CEO made in one year. Tesla's proposed a pay package for Elon Musk worth up to$1 trillion over 10 years. I mean, it just gets worse and worse. So what to do about it? I think capitalism is about not putting ceilings on earnings. And I believe in a market demand versus supply-based labor pool with higher minimum wage, I don't think.

4:52Wasn't the board of Urban Outfitters and the CEO there said, you know, when we came under fire for some of the retail workers at Urban Outfitters stores not making a lot of money,

5:04Scott Galloway:came under fire for paying them so little. And he said, we believe in supply and demand around the labor force. Now, having said that, he also agreed at the end of the year to share a decent chunk of the profits with the store employees. He's a, anyways, the company is controlled by the Haney family, and I found them to be very decent people. Anyways, I don't have a problem with CEOs making billions of dollars. I don't have a problem. I don't want the government to regulate ratios. What I think the government should do is the following. I don't have a problem with Elon Musk making$1 trillion. I think he should pay 70 % marginal tax rate on that trillion dollars.

5:46Scott Galloway:I think corporations should pay an alternative minimum tax of 40%. They're paying about 22%. I think the average is probably closer to 17 % or 15 % when they stitch in all their loopholes. So I have no problem with people making a ton of money. What I want is a more progressive tax policy. And what happens now is that because the majority of CEO compensation comes in the form of equity, equity is taxed at a lower rate than salary. That makes no fucking sense. I go back to what Reagan. Reagan used to, it was just income. It wasn't, the battle is in rich versus poor so much as it's owners versus earners and everyone versus the super rich.

6:24Scott Galloway:if you're making a million dollars in salary as the head or the head of the mna practice for a law firm and you're living in new jersey you're probably paying 50 tax rate but if you get to a point where you're uh oh you own or you're the the general counsel of a of a firm with public equity and you get a million dollars in stock you pay a lot less in tax rate that makes no fucking sense So when did we decide money is more noble than sweat? So I think we need to equalize and lower the rates for earners and increase the rates or the alternative minimum tax or the rates that owners pay. Because essentially their wealth compounds annually with no friction.

7:06Scott Galloway:If you're a stock and every year you increase by$100 ,000 at your salary, we're going to take 20 or 30 percent of it every year. So it just doesn't, it never grows that big. But if you own$100 ,000 with a stock, it can grow tax-deferred and keep compounding without ever getting clipped unless you sell it. So I'm all for enormous pay packages. I think anything to try and get in the way of that is just going to create all sorts of weird perverted behavior. What do we need to do? We need to ensure that at a minimum, employees are making$25 an hour. In certain urban counties in America, which would put chicken processing plants out of business, fine.

7:45Scott Galloway:Then you could adjust it down for certain territories where you can manage a middle-class household on 20 bucks an hour. Okay, fine. But for most of us, most places in the nation, 25 bucks an hour minimum wage. It would be 23 if it had just kept up with productivity and inflation since the 70s. In addition, have at it. Pay the CEO of Starbucks 87 million. he should be taxed 60, 70 % on that money. Why? What you want is a tax system that is the least taxing. And when you tax the CEO of Starbucks, who I'm sure is a lovely man, 70%, this is what happens. Nothing. I mean, you put more money into the government so we can reduce our deficit and invest in schools and the Navy and parks and what have you, but nothing happens to him or his family in terms of happiness.

8:34Scott Galloway:Daniel Kahneman, one of my intellectual role models, did a study, talked a lot about money. Above a certain amount, money can buy happiness up until a certain point. And then once you can afford healthcare, nice vacations, housing, an economic shock, which is a lot of money, it levels out. Now, another myth, billionaires are unhappy. No, billionaires are no less happy than millionaires, but they're no happier. So if you're gonna get no incremental happiness from, if Elon Musk is gonna get no incremental happiness from that trillion dollars, but hundreds of thousands of households would get a lot of incremental happiness from universal childcare, then my attitude is let's go back to the 50s, 60s, and 70s where we had a much more progressive tax structure.

9:17Scott Galloway:In sum, I don't believe you can get in the way of market dynamics around CEOs making a shit ton of money. A good CEO adds a lot of value. Let me add some nuance. I've been on the compensation committee of a bunch of companies and this is how it got out of fucking control. every year, Towers Parent comes in to the board and we pay them a quarter of a million dollars to do a compensation study. And they say, okay, Janet Robinson, I was on the board of the New York Times, is the CEO of a$5 billion media company. This is what the average person at 50 % makes of CEOs of$5 million media companies. They make$3 million.

9:51Scott Galloway:And we say, but wait, Janet's nice. We don't want to just pay her at 50%. We want to pay her at 60 or 70. So we pay Janet 3.8. But here's the problem. When you pay people 20 % above the median, that doesn't sound like a lot. But then every other company, the median starts to explode and every company has to keep up with the Joneses. Meanwhile, the people who aren't, don't play golf or have relationships with the board just get slightly above inflation. But the CEO, who's a good guy or a good gal who you get to know, who, by the way, puts you on the board and you're making a quarter of a million dollars a year on the board of The New York Times, you want to pay her above average.

10:27Scott Galloway:So if you pay 20 percent above average, which doesn't sound like a lot, that's just at the 60 percentile. That means every three and a half years you're doubling CEO compensation because everybody else has to adjust as well. So we have seen a skyrocketing and an explosion in compensation. This is about tax policy more than the government trying to interfere with compensation. I appreciate the question. Question number two comes from Andrea. Hi, Scott. I'm a liberal, Subaru-driving, tote bag-carrying, rural, Christian white woman. But as an economic realist, I find myself agreeing with you about 75 % of the time.

11:07Each week, I volunteer to distribute breakfast bags to homeless outside my church, and we frequently host student groups from schools to help us move heavy bulk items, make sandwiches, pack paper bags, and hand them out to anyone who needs and asks. And each week, I find that my volunteers are always girls. Even when it's athletic teams, it's only girls' teams. When I first started teaching, I knew that boys were always less involved in clubs and extracurriculars in general. But 10 or 15 years down the road, good testosterone is even harder to find. I don't know whether to blame the manosphere, Trump, the parents, etc.

11:52But rather than focusing on the problem, my question for you as an economist is about incentives. How do we incentivize our young men to engage more in community issues? How do we incentivize their parents to lead them on the way they should go? How do we incentivize schools, coaches, organization leaders, etc. to start holding their young men to a higher level of citizenship? Because obviously, someone has de-incentivized them. Thanks again. And trust me, I hear you when you say that building stronger men makes for safer women and children in the long run. Thanks, Andrea. Hello, Subaru drivers.

12:35So first off, I can't, it's as if no one, everyone always says the same thing. While I don't always agree with Scott Galloway, I get the 75 % a lot. It's hilarious. And most of my comments I would start with, people are embarrassed to just agree with me. They say, while I don't always agree with Scott, I agree with Scott 75 % of the time. And I'm fascinated by the ratio because the 75 number comes up a lot. One, I do get it wrong a lot, constantly. I'm trying to be as unfiltered as possible. And sometimes it results in hot takes that are quite frankly, they're just the wrong take. But what I would also say is, I appreciate people tolerating me because I do think it's important to listen to people that if you listen to someone you always agree with, you're probably not gonna learn a hell of a lot or it's just gonna cement your opinion and probably put you further in the center of your bubble.

13:24Anyways, I wish I had a more thoughtful answer. I had two emotions. The first is one, You sound lovely and you sound like the kind of thing that or the person that really is the fabric of America. And my second emotion was, it's just such a bummer, right? It's such a bummer that I see this everywhere. I talk a lot about the importance of mentorship, especially male mentors in a young boy's life or a young man's life. There are three times as many women applying to be big sisters of New York as there are men. and I'm embarrassed to say it. I think I was one of those men. I think up until the age of 40, I just wasn't very philanthropic.

14:01I don't know if it's the feminization of nonprofits. It's seen as more feminine. I don't know if it's because women are more nurturing. I don't know if it's instinctual. I don't know if it's women are brought up to be more service-minded, more sensitive, to be pleasers. The honest answer is I don't know what can be done. I think that as a standard practice among organized sports and just organized clubs, there has to be a service component. In addition, femininity and masculinity are social constructs, and we get to fill those vessels with whatever we want. And I've been thinking a lot about, you know, I read a book on masculinity and I was saying basically the three legs of the stool are provider, protector, procreator.

14:53I think where I missed it, and I missed a lot, is I'm trying to figure out an elegant way to incorporate an aspirational vision of masculinity that includes service. And I think a decent test for masculinity in your actions, and when I talk to young men, especially when they get social media following, are you optimizing for service or for attention? I think unfortunately a lot of our weaker role models are constantly optimizing for attention and not for actual service. And some people would say that decent definition of character is doing the right thing when no one's looking. But I wonder how we can incorporate, especially among young men through our schools, our religious institutions, that masculinity and the strong man has a strong foundation in service.

15:43And a lot of religious institutions do a great job of this. I remember my dad was married and divorced four times, as far as we know. And I remember going to, we were a member of a Presbyterian church out in Westlake, California. And on a regular basis, the whole, what do you call it, the whole parish, the whole community would go provide service. At my son's school, they are forced to, here in London, engage in some sort of volunteer service. I wonder if some of the male role models, if we can do a better job of encouraging them to highlight their service. And I do think actually a lot of athletes do a good job.

16:23But I don't have like a silver bullet here. And I find it just so disappointing to hear that. And when you say it, it just resonates. So let's try and summarize. I don't think this is about men being less generous. I'm holding out that's not the case. I think it's about incentives, identity, and social structure. Volunteering is, to a certain extent, how we've designed pathways for young women. To be more nurturing, to be pleasers, and it doesn't map as clearly to how young men are wired or rewarded.

17:03Scott Galloway:They're expected to be providers, ballers, make a ton of money, and I think volunteering is seen as low ROI. Or more bluntly, if you want more young men volunteering, you have to make it look more like status, skill building, or a team-based activity, not just service, if you will. But it's an issue. It's one we should address at a very young age. And I want to finish where I started. I think that people such as yourself are the fabric of this country and very much appreciate you and your service. I hope you have boys and girls. I just hope you have kids. We'll be right back after a quick break.

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21:32Welcome back. Question number three comes from I am the catalyst on Reddit. Early on as a business owner, hiring has always been one of my most important responsibilities. As we've grown, more of our recent hires are specialized roles where I have less direct involvement. What I'm navigating now is less about hiring and more about managing people whose motivations differ from the company's core direction. For example, I have an employee who has been passionate about pursuing B2B partnerships, and frankly, it's been wildly successful. But at our core, we're a B2C business, and that's the mission I want to protect.

22:02Scott, have you experienced something similar where an employee's drive and results are generally impressive, but their vision pulls in a different direction than where you want to take the company? How do you reward the employee's contributions without signaling to your long-tenured mission and line team members that the company's direction is shifting. Hmm. This sounds very situational. And I would argue that if this person is that successful, it probably means you may want to, I don't know, calibrate or, I don't know, manicure the positioning. Every company I've started has ultimately ended up doing something different than I'd originally envisioned.

22:36My first firm was a market research firm. And then we dropped market research and called it strategy. I had started coming all 911 gifts for last minute gift giving. Then we went more aspirational. It became red envelope. Initially, L2 was benchmarking luxury brands. Then it just became about benchmarking. I mean, so I would be, I think like that's why you get paid the big bucks. You've got to decide if it's bad for the culture and not helping. We have a really robust speaking business. We probably do four or five million bucks a year in property markets. I used to be the only speaker, but now we have two or three people who get paid speaking gigs.

23:15That's not the future of the firm. No one's going to buy it. They're not going to buy us. We're not going to create a ton of shareholder value through speaking. But it's a great way to fund the company's strategic initiatives so we can hire more tech people, launch more podcasts, et cetera, pay people better. So I just think it's situational. If they're doing, you know, if they're doing something totally different that's bad for the culture and taking off course and not making a lot of money, yeah, then shit can it. But if this person is really wildly successful, milk it and take the cash or maybe rethink the direction of the company.

23:49If that's a division that should, you've kind of stumbled onto something that's maybe better and bigger than your core business. But again, it's situational. And I don't, it's not bothering anybody or, you know, I just don't, to me, this sounds like a good problem. And it's a question of proportions. If this individual is garnering a ton of incremental high margin revenue, then ring fence them, let them have at it. and also reevaluate if this means if you've stumbled onto what might be a nice adjunct for the company or maybe requires serious consideration around complimenting or changing the direction of the company.

24:30In some, I don't know without having more specifics. And also the fact you're bringing this up maybe thinks that gives me the impression that maybe you don't like this person's approach to work and that they just make so much money that you have to put up with them. I've had a lot of those. And that's what it means to be a manager is, unfortunately, usually the most talented people in the company, not always, but oftentimes are the biggest assholes

24:56Scott Galloway:because they know they have leverage. Anyways, I apologize. I don't have a real, unless I knew more about the specifics, the size of the incremental revenue from that B2B business. But if it's not, if it's, yeah, it's an easy one. If it's not offering a ton of marginal revenue, and it's a distraction, then shit can it. But I think you have to meet with some people, lay out the numbers, lay out your concerns, and have a kitchen cabinet. I don't know if you have a board to make a thoughtful decision around this. Thanks for the question.

25:32That's all for this episode. If you'd like to submit a question, please email a voice recording to officehoursofprofitimedia.com. Again, that's officehoursofprofitimedia.com. Or if you prefer to ask on Reddit, just post your question on the Scott Galloway subreddit, and we just might feature it in an upcoming episode. This episode was produced by Jennifer Sanchez and Laura Janair. Kami Rieke is our social producer. Brad Williams is our editor. And Drew Burrows is our technical director. Thank you for listening to the PropG pod from PropG Media.