CEO pay is excessive in most cases, about one in threedirectors of
Among other key findings, the survey reveals concern thatCEO pay is on the rise, and on the broad subject of the matter, about three outof 10 respondents (32.2 percent) feel that executive pay is too high in mostcases – an increase over the 25 percent of board members who felt the same wayfrom 1998 through 2001.
However, just more than half (51.8 percent) of allrespondents said that CEO compensation is “about right except for a fewhigh-profile cases.”
While many news reports this week revealed the study’sfindings as showing that CEO pay is deemed too high by directors, others, suchas by CNBC, have focused on the fact that the majority (51.8 percent) ofdirectors who responded feel that compensation for top executives is where itshould be.
“It is interesting that even though it is boards thatdetermine the level of execuvite compensation, they still point to theimportant role consulting firms play.” — Ted Dysart, Heidrick & Struggles
As in the 2006 survey, board members see the actions ofcompensation consulting firms and the creation of new incentive compensationprograms as the major reason for the continuing increase in CEO pay.
“It is interesting that even though it is boards thatdetermine the level of execuvite compensation, they still point to theimportant role consulting firms play,” Ted Dysart, managing partner forHeidrick & Struggles’ Global Board of Directors Practice, said in astatement.
The survey also finds widespread unhappiness among directorsregarding disclosure rules about CEO pay mandated by the Securities andExchange Commission. Those rules were unveiled with great fanfare to giveinvestors better, timelier information about pay and other compensation for topexecutives. Despite the intentions, most directors have said they doubt therules are meeting investors’ needs.
“Executive compensation and how that information isdisclosed have been controversial for some time,” Dr. Ed Lawler, director ofthe Center for Effective Organizations and a business professor at USCMarshall, said in a statement. “But what this survey unmistakably shows is thatthe issues are a growing concern even among the people most responsible fordealing with them: the board members of public companies.”