Peter Drucker said no executive should make more than 20 times as much as a company worker.

He was speaking in 1982. He was spot on then and his point stands today.

I'd phrase things differently:

No executive is worth 20 times the pay of ordinary workers.

So why are companies willing to pay some executives many hundreds times the pay of ordinary workers?

It isn't because they deliver 'shareholder value', there's almost no link between company performance and executive pay.

John Mackey at the Harvard Business Review blog says:

If CEO compensation is primarily driven by competitive markets, then how come the ratio was only 24 to 1 back in 1965 and is about 300 to 1 today? Surely the market demand for good CEOs is no greater today than it was 45 years ago or 25 years ago. Are CEOs today really worth that much more than their comparable peers were worth just a few decades ago?

Rosabeth Moss Kanter makes an interesting point on her blog at The Harvard Business Review when she writes about a successful legal action brought by Mattel, owner of the Barbie brand against MGA Entertainment Inc which owns Bratz.

Former Mattel designer Carter Bryant was charged with intellectual property theft because the company said he had the idea for Bratz while working for Mattel. The company's contracts make it clear inventions made while working for the company become its property.

So, if your current employer does things badly and you know a way to do them better, you now need to halt your thinking processes while you serve out your notice or you could find yourself on the nasty end of a writ. It's a twist on the idea an knowledge worker is someone who is paid to think for a living.