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Most bosses have a higher salary than their employees. But there are exceptions to the rule.
In sports, for example, a star player often earns more than their coach. And in the film industry, A-list actors take home bigger paychecks than the director.
So when does it make sense for an employee to earn more than their boss? When they’re delivering a highly-valued and specialized skill set, writes my colleague Natalie McCormick. That includes Kansas City Chiefs quarterback Patrick Mahomes, who earns around $20 million more per year than his coach Andy Reid. And it also includes Nick O’Kane, the former commodities head of Australian bank Macquarie, who earned around $28 million more than the CEO over a two-year period.
But not all instances of topsy-turvy compensation need to include eye-watering sums of money. In the tech world, employees with highly-specialized skills often earn more than their bosses. And star sales people, who work on commission, will often take home heftier paychecks than their managers after a blockbuster year. Temporary employees can also an exception to the rule—an engineer brought in to fix a security breach, for instance, will often be well compensated for their efforts. And in some cases, employees end up with higher paychecks than their direct managers because of successful salary negotiations.
To be sure, things can get complicated when a worker earns more than their boss. Some managers might feel odd about their employees earning more than they do, and the employee may start to feel that they’re immune from the rules that everyone else must follow. But bosses shouldn’t close themselves off to the idea of an employee earning more than they do, Ron Seifert, a senior client partner at executive recruiting firm Korn Ferry, tells Fortune.
“I would say that a thoughtful and effective leader will look at that and be totally delighted with somebody’s exceptional performance, producing an outsized reward for them because it’s to the benefit of the organization,” he says. “That over time makes the leader look smart for having somebody who performs so exceptionally well.”
You can read more about the case for higher employee compensation here.
Azure Gilman
azure.gilman@fortune.com
Today’s edition was curated by Emma Burleigh.
Around the Table
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Watercooler
Everything you need to know from Fortune.
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