This Day On The Street
Continue to site
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

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.


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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs