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US public believes CEOs are overpaid

The Rock Center for Corporate Governance at Stanford University has recently conducted a representative survey of 1,202 Americans to understand public perception of chief executive (CEO) pay levels among the 500 largest US publicly traded companies.

The survey found that 74% believe CEOs are not the right amount compared with the pay of an average worker – only 16% believe they are. Nearly two-thirds (62 percent) of Americans believe that there is a maximum amount that CEOs should be paid relative to the average worker, regardless of the company and its performance. The results also show that 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 percent) than Democrats (66 percent) or Independents (64 percent).

The results come with the issue of CEO pay emerging in the US Presidential election race with candidates on both the Democrat and Republican side commenting that their pay is too high. The report’s authors quote the Democratic candidate Hillary Clinton, as saying that the average CEO “is now earning 200 times the average hourly wage. Twenty years ago the ratio was about forty times. People all over this country are really upset about this,” and Republican candidate Donald Trump, saying that CEO compensation is a “total and complete joke…. they get whatever they want.”

One of the report’s authors, Professor David F. Larcker of Stanford Graduate School of Business said, “There is a clear sense among the American public that CEOs are taking home much more in compensation than they deserve,” says . “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.”

What do you think?