Public (mis)perception of CEO pay.

Position:COMPENSATION COMMITTEE

Seventy-four percent of Americans believe CEOs are not paid the correct amount relative to the average worker. Only 16% believe they are. While responses vary across demographic groups (e.g., political affiliation and household income), overall sentiment regarding CEO pay remains highly negative.

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"There is a clear sense among the American public that CEOs are taking home much more in compensation than they deserve," says Professor David F. Larcker of Stanford Graduate School of Business. "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"

* The average American grossly underestimates how much CEOs make. Disclosed CEO pay at Fortune 500 companies is 10 times what the average American believes those CEOs earn. The typical American believes a CEO earns $1 million in pay, whereas median reported compensation for the CEOs of these companies is approximately $10.3 million.

* Americans believe CEOs are overpaid relative to the average worker. The vast majority (74%) of Americans believe that CEOs are not paid the correct amount relative to the average worker. Only 16% believe they are paid an appropriate amount. While responses vary by political affiliation, they remain largely negative. Only one quarter (25%) of Republicans believe CEOs are paid the correct amount relative to the average worker, compared to 16% of Democrats and 11 % of Independents.

Nearly two-thirds (62%) of Americans believe that there is a maximum amount CEOs should be paid relative to the average worker, regardless of the company and its performance. Interestingly, a majority of all political groups believe CEO pay should be capped in some manner, though Republicans are somewhat less likely to hold this opinion (52%) than Democrats (66%) or Independents (64%).

Those who believe in capping CEO...

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