Americans fed up with high CEO pay, study finds

If there’s one thing most Americans can still agree on in today’s divided political climate, it’s that corporate CEOs make too much money compared to their employees, a new study reports.

Research released Thursday by the Stanford Graduate School of Business found 74 percent of Americans believe CEOs at the 500 largest U.S. companies aren’t paid the correct amount relative to the average worker. Only 16 percent of the 1,202 people surveyed nationwide believe CEO compensation is appropriate. It’s a sentiment shared by the majority of Americans on both sides of the political spectrum — 77 percent of Democrats reported that CEOs are overpaid, compared to 61 percent of Republicans and 78 percent of Independents.

“There is a clear sense among the American public that CEOs are taking home much more in compensation than they deserve,” Stanford professor David Larcker wrote. “While we find that members of the public are not particularly knowledgeable about how much CEOs actually make in annual pay, there is a general sense of outrage fueled in part by the political environment.”

That means corporations and their boards need to do better at explaining and justifying CEO pay, added Stanford lecturer Nick Donatiello.

It turns out most Americans don’t know how much these top CEOs actually make. Survey respondents said they believe the typical CEO earns $1 million — but the median reported salary for a Fortune 500 CEO is actually 10 times that. And survey respondents guessed CEOs earn an average of $9.3 million, compared to the actual reported average of $12.2 million.

Americans appear unsure as to what should be done about overpaid CEOs. Half of survey respondents favor government action to change CEO pay practices. Of those who support government involvement, 28 percent would increase taxes on CEO compensation, 25 percent would limit what a CEO can make relative to the average worker, and 17 percent would limit the absolute value a CEO can make.

Illustration from KRT archives

 

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  • alrui

    Fed up? You bet your a**!

  • sj0

    “Survey respondents said they believe the typical CEO earns $1 million —
    but the median reported salary for a Fortune 500 CEO is actually 10
    times that. And survey respondents guessed CEOs earn an average of $9.3
    million…”
    Which was the incorrect guess, $1m or $9.3m? Is this salary vs total compensation?

  • itellu3times

    And Silicon Valley is ground zero for the problem, in your typical startup the founders make big bucks and anyone after employee #5 makes zilch. Oh, and the VCs take half. Yet in those same typical startups it is NOT the founders who write a line of code. Even if employee #6 makes a million bucks off options and on top of a nice, safe salary, the ratio is not good. Yes, risk, but that’s just one side, risk/reward is the issue, or in this case reward/risk. Especially founders using that OPM, I’m not so sure the “risk” is ever really there. On the VC side – well, that’s another story.

  • itellu3times

    And Silicon Valley is ground zero for the problem, in your typical startup the founders make big bucks and anyone after employee #5 makes zilch. Oh, and the VCs take half. Yet in those same typical startups it is NOT the founders who write a line of code. Even if employee #6 makes a million bucks off options and on top of a nice, safe salary, the ratio is not good. Yes, risk, but that’s just one side, risk/reward is the issue, or in this case reward/risk. Especially founders using that OPM, I’m not so sure the “risk” is ever really there. On the VC side – well, that’s another story.

 
 
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