CEO compensation is a hot topic. So much so that even President Bush felt the need to question whether CEOs are worth what they’re paid in his “State of the Economy” speech last Wednesday. His comment:
“Government should not decide the compensation for America’s corporate executives. But the salaries and bonuses of CEOs should be based on their success at improving their companies and bringing value to their shareholders.”
Of course you could argue that the President is at least partially motivated by political considerations. His party could certainly use the support of the large percentage of Americans who are not CEOs. But new evidence reported by the Financial Times this Sunday suggests that even CEOs think CEOs are overpaid. The National Association of Corporate Directors surveyed CEOs as well as board members. The results:
Four out of six chief executives or company presidents polled by the NACD in July and August said the compensation of top executives was high relative to their performance. Only 2.2 per cent of the nearly 70 chief executives and presidents involved in the survey said compensation was too low, while a third deemed it “just right”.
Their views were backed up by outside directors, with more than 80 per cent of them saying chief executives were overpaid.
The results are likely to embolden activist investors and those calling for careful consideration of executive pay in light of the fact that income inequality in America has reached its highest point in sixty years.
(Image of Monopoly man by PetroleumJelliffe, CC 2.0)
