(H) (Unknown) - Gather all resources relating to Gini Coefficient and Pareto principles for workforce compensation structure

[FullstackGJJ]

Context: With the thought that a well structured workforce compensation structure that rewards good talent and minimizes drastic inequality, the pay distribution can be a good unbiased indicator as to whether an organization is sustainable, profitable, and built for growth in the long run.

Question: How do we determine that a company's workforce compensation structure is fair at compensating top talent and also good enough to retain good remaining talent?

[FullstackGJJ]

Idea: The Pareto principle could be a decent measure to go by https://en.wikipedia.org/wiki/Pareto_principle

[FullstackGJJ]

Idea: SEC rules that information about pay ratio have to exist https://www.bassberrysecuritieslawexchange.com/faqs-new-sec-rules-pay-ratio/

https://www.sec.gov/news/pressrelease/2015-160.html https://www.mayerbrown.com/-/media/files/news/2015/11/the-secs-pay-ratio-disclosure-rule-and-its-implica/files/1511richmanhermsen/fileattachment/1511richmanhermsen.pdf

In the example of Apple, their CEO to median pay ratio is in the proxy statement https://investor.apple.com/sec-filings/sec-filings-details/default.aspx?FilingId=15467181 same for Microsoft https://www.sec.gov/Archives/edgar/data/0000789019/000119312520272025/d31295ddef14a.htm#toc31295_23

So it would be possible to to come up with a inaccurate gini coefficient curve knowing the # of employees and the max (most likely CEO). In Apple's SEC filing, the # of full-time employees is reported in its 10-K annual report https://d18rn0p25nwr6d.cloudfront.net/CIK-0000320193/42ede86f-6518-450f-bc88-60211bf39c6d.pdf in the section titled "Human Capital." Microsoft does the same in section "Human Capital Resources" https://microsoft.gcs-web.com/static-files/0a2b8528-fb8b-4d11-8da2-fd9fa988a155

[FullstackGJJ]

Idea: Gini Coefficient could be a way to check if drastic inequality that can't be accounted for exists in pay structure of workforce https://en.wikipedia.org/wiki/Gini_coefficient. Gini Coefficient of 60% would be in line with the pareto principle. Expressed by Lorenz curve https://en.wikipedia.org/wiki/Lorenz_curve. Instructional primer for gini coefficient http://www.richardhaskell.net/resources/Measuring+Distributional+Inequalities.pdf

Using Lorenz curve to express inequality https://www.youtube.com/watch?v=D_m6ytSNEuA

https://www.wallstreetmojo.com/gini-coefficient/

Score = Fraction of Total Income * (Fraction of Total Population + 2 * % of Population that is richer).

[FullstackGJJ]

Idea: Based on the fact that SEC requires compensation reporting through form 10-K https://www.sec.gov/files/form10-k.pdf. It may be possible to figure out the income distribution. It seems though that I can't find information regarding the total compensation of the workforce or the mean income though.

[FullstackGJJ]

Idea: Based on this https://money-zine.com/definitions/investing-dictionary/income-per-employee/. It may be possible to calculate income per employee.

In this example of Apple (https://d18rn0p25nwr6d.cloudfront.net/CIK-0000320193/42ede86f-6518-450f-bc88-60211bf39c6d.pdf) the operating income is $108,949,000,000. The total # of employees listed is 154,000.

So the operating income per employee would be 108949000000 / 154000 = 707461.04 ~~ $707,461.04

I'm not yet sure how to measure that against median income of Apple workforce being $68,254 yet though.

The CEO being paid $98,734,394 is 139X the operating income per employee of $707,461.04