LOS ANGELES Just over half of corporate directors surveyed said CEO compensation at publicly traded U.S.-based companies is just about right except for a few high-profile cases, but one-third of directors say most are paid too much.
According to a joint survey of directors by Heidrick & Struggles International and the Center for Effective Organizations at the Marshall School of Business, University of Southern California, 51.8% thought CEO pay is generally appropriate, but 32.2% believed CEO compensation is too high in most cases.
Ninety percent said CEO pay should be no more than two to three times higher than the next highest-paid executive, though 85% thought that pay spread is about right in their own company.
Only 11.2% thought the Securities and Exchange Commission-mandated executive compensation disclosure in proxy statements served investors well; 11.6% agreed to a great or very great extent that the information was easily understood; 10% believe the disclosure did a good job of explaining how compensation decisions are made; and 27.8% agreed the proxy statements provide valuable information about the amount of executive compensation.
While more disclosure is generally viewed as a good thing, most board members find that what is made available today is difficult to understand, lacking in context and generally not effective for informing investors and other company stakeholders, said Ed Lawler in a statement about the survey. Mr. Lawler is director of the center and professor of business at the Marshall School.
In all, 227 directors responded to the survey.