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74% Of Americans Think CEOs Are Overpaid

CEOs are reportedly still pretty happy with their paychecks.

74% Of Americans Think CEOs Are Overpaid

Photo: Photodisc/Getty Images

Not many topics unite Hillary Clinton and Donald Trump, but the egregiousness of CEO pay is one of them. Clinton has noted that CEO compensation is 300 times that of the average worker, while Trump has spoken of how CEO compensation is a "total and complete joke . . . they get whatever they want." It seems that executive remuneration is a breakthrough subject this election season, bringing together both left and right.

That's certainly reflected in a new survey of 1,202 Americans. It finds that 74% of respondents believe CEOs are not paid "correctly" compared to the average worker. Only 16% of respondents think CEOs are valued correctly. "It is remarkable when 74% of Americans agree about anything in today’s environment—particularly something as politically charged as CEO pay," says Nick Donatiello, a lecturer at Stanford Graduate School of Business, which carried out the poll.

In fact, as other surveys have shown, people generally underestimate the level of executive pay. On average, people say it's about $1 million annually. Actually, it's getting to be 10 times that much among Fortune 500 companies. Lower-income respondents tend to make lower estimates than higher-income respondents.

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Interviewees were asked a hypothetical question, where a CEO managed to increase a company's value by $100 million. What share should the manager get of that? The median amount among respondents was $500,000. The average was $3.2 million—which is probably still lower than what a CEO would actually get in real life.

While majorities agree that executive pay is out of whack with average pay, Americans are less agreed on ways to close income gaps. Only 49% said that the government should put a cap on pay scales, including just 36% of Republicans and 47% of independents. Sixty-two percent overall said there should be a maximum pay for CEOs, but only 25% would set a hard limit on the amount CEOs get compared to average workers. (Public companies these days are required to disclose in filings the ratio of CEO pay to average workers).

Of course, companies argue they need to pay high salaries to attract top talent. But the public doesn't seem to really understand that point. "Clearly, companies have not been successful at communicating how much value their CEO creates," Donatiello says.

And the value they create—don't forget—is basically nothing.

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