A new survey of corporate directors finds most think CEO pay is just fine. And while a third still think it's too high, that is a smaller number than thought so last year.
A joint survey by the executive search firm Heidrick & Struggles International, and the University of Southern California's Marshall School of Business, found 51.8 percent of the directors polled thought CEO compensation was "about right" save for a few high profile cases.
Surprisingly, despite all the public outcry about excessive CEO pay last year, 32.5 percent of the directors thought pay was too high. That is down from the 38 percent who said it was in the 2007 survey. Sixteen percent thought CEO pay was appropriate and none of the 227 directors polled thought pay was too low.
In a review of last year's SEC filings of more than 2,500 companies, The Corporate Library found the average total compensation for a CEO in 2006 was $1,932,000. The average for a CEO of an S&P 500 company jumped to $15,060,000. When determining total compensation the survey included base salary, bonus, non-equity compensation, change in pension and other pay.
Among the highest paid CEOs in 2006: Occidental Petroleum'sRay Irani whose total compensation was $322,316,381, Oracle's Larry Ellison, $192,917,552 and Home Depot's former CEO Bob Nardelli, $188,001,552.
Nardelli's pay set off a firestorm of protest at the home improvement retailer that led to his ouster and galvanized shareholder activists seeking to give shareholders a say, or vote, on executive pay during last year's proxy season. It is an issue that will be front and center again at this year's annual meetings, with over 90 "say on pay" proposals having been filed.
In its eleventh year, the survey also found most directors — more than 86 percent — believe the compensation programs at their firms are effective or very effective. Roughly the same percentage feel the pay difference between a CEO and the other members of their firm's management teams is "about right."
When asked how important various factors were in contributing to the increase in CEO pay we have seen since 1980, 43 percent cited new stock and incentive compensation programs as being very important, 27.6 percent credited a scarcity of talent, 41.3 percent said an emphasis on pay for performance and 33.2 percent said the action of compensation consulting firms like the survey's sponsor Heidrick and Struggles.