If I wanted to see if CEO wages were unjustifiably low or high, I'd look at things like total revenue, profit, stock price growth, etc. Then you could at least tell if pay is linked to performance.
I have a feeling that this is the entire point.
edit: to be clear, I disagree with it because it's a terrible way to measure what I think OP is trying to measure. As another commenter mentioned, this simple ratio doesn't tell the whole story.
Why is it more ethical to outsource low paying work to vendors to get it off payroll?
Not saying this is the only point just that outsourcing isn't the only issue here.
Hire a part-time janitor at $15k and you look like Mr Burns, but out-source it so your next lowest paid employee is making $150k and you look like a saint.
But nothing's change with how much the CEO is paid.
I think what you're missing is that this particular metric doesn't care about performance of the company or if the CEO "deserves" that much money or not, and that's by design. When people compare the pay of a CEO to the pay of their employees it's typically because the entire point of the comparison is to to draw judgement on the CEO's business model.
For example, a common example where this metric is used is to cast judgement on the owners of Walmart for being multi-billionaires while their employees make near minimum wage. The point is not to say anything about the specific performance of those owners or of the employees (and often intentionally ignores it as a factor), but rather to specifically call attention to the disparity in distribution of wealth within the company and to cast judgement on the business model where one person gets rich while depending on the work of people who remain poor.
Again, I don't agree with the use of this tactic to measure anything. I'm just explaining why its done.
Which would make CEOs who outsource lower wage work to vendors and contractors look better.
Someone making $10m per year paying poverty wages (infer they are getting rich by paying poverty level wages) is going to be judged differently by people then the CEO paying $200k median.