- A new study by Stanford University's Rock Center for Corporate Governance shows the American public is way off when it comes to estimating CEO salaries at Fortune 500 companies.
- Results of a survey sample of 1,202 individuals found the median response believed the CEO salary was $1 million with an average response of $9.3 million. However, CEOs make a median of $10.3 million and an average of $12.2 million.
- Almost 75% of respondents said CEO-to-worker pay ratio is not what it should be and 33% said CEO's pay should be capped relative to worker's pay. In general, sentiment regarding CEO pay remains negative.
The survey also showed most of those polled agree CEO pay is an issue but don't agree on how to resolve it. Roughly half think the government should be involved, but have various ideas on how that would work, ranging from raising taxes on CEO compensation to banning stock options in compensation contracts.
A study co-author, Nicholas Donatiello, president and CEO of Odyssey, a market research company, and a lecturer at Stanford, wrote companies should clarify how CEO pay is connected to performance. Respondents said hypothetically if a company's value grows $100 million, the CEO should receive 0.5% as compensation.
"There is a clear sense among the American public that CEOs are taking home much more in compensation than they deserve," David Larcker, a professor at the Stanford Graduate School of Business and study co-author said. "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 movement."
CEO compensation is a hot topic and one that the presidential candidates have discussed. Despite being a billionaire, even Republican Donald Trump referred to enormous CEO salaries as a "total and complete joke."