This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

U.Va. Darden Researcher Delivers New Evidence For U.S. CEO Pay Critics

CHARLOTTESVILLE, Va., Feb. 4, 2013 /PRNewswire-USNewswire/ --  A University of Virginia Darden School of Business study finds that American CEOs are worth their paychecks.

(Logo: http://photos.prnewswire.com/prnh/20100916/DC66431LOGO)

The number of zeros in paychecks of American CEOs often comes under fire. Many believe that American CEOs take home too much money. American workers who face stagnant to lowering wages in a tough economy have argued the point, as have professional firms, which emphasize that CEOs in America earn more than their counterparts abroad. 

Do they?

"No," said Darden Professor Pedro Matos. In his upcoming paper, "Are U.S. CEOs Paid More? New International Evidence," Matos and his colleagues investigated CEO salary data from more than 1,600 U.S. and international firm across 13 European countries. Without the limitations of past domestic and global compensation disclosure rules, the researchers learned not only do American CEOs earn salaries comparable to those of international CEOs, but many U.S. CEOs earn a portion of their pay based on the value they create for shareholders.

The results will appear in a future edition of The Review of Financial Studies.

Matos reported in "Harvard Law School Forum on Corporate Governance and Financial Regulation" blog that paychecks of U.S. CEOs are quite reasonable. He took into account characteristics such as board structure, firm type and ownership structure.

"Initially, U.S. CEO salaries appear twice as large as salaries of CEOs in other countries, but one is really comparing apples to oranges due to differences in the way that U.S. firms operate compared to their international counterparts," said Matos.

According to Matos, American-based firms lean toward institutional ownership and independent boards, which leads to better oversight. 

"We think it's a sign of good corporate governance when firms are monitored closely by institutional owners as well as independent board members. These push for CEO pay to be tied to shareholder performance," said Matos. "It should cause us to question the belief that U.S. CEO pay is excessive."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs