What are CEOs paid; what should they be paid?
From Harvard Business Review, reporting on recent research
Using data from the International Social Survey Programme (ISSP) from December 2012, in which respondents were asked to both “estimate how much a chairman of a national company (CEO), a cabinet minister in a national government, and an unskilled factory worker actually earn” and how much each person should earn, the researchers calculated the median ratios for the full sample and for 40 countries separately.
The graph:
The radial graph exaggerates the differences, but they are already huge. Respondents dramatically underestimated what CEOs are actually paid, and still thought it was too much. Here’s a barchart of the blue and grey data (the red data seems to only be available in the graph). Ordering by ideal pay ratio (rather than alphabetically) helps with the nearly-invisible blue bars: it’s interesting that Australia has the highest ideal ratio.
The findings are a contrast to foreign aid budgets, where the desired level of expenditure is less than the estimated level, but more than the actual level. On the other hand, it’s less clear exactly what the implications are in the CEO case.
Thomas Lumley (@tslumley) is Professor of Biostatistics at the University of Auckland. His research interests include semiparametric models, survey sampling, statistical computing, foundations of statistics, and whatever methodological problems his medical collaborators come up with. He also blogs at Biased and Inefficient See all posts by Thomas Lumley »