The belief that CEOs of public companies are overpaid is certainly not a new one, but a web survey conducted by COMPAS Inc. found that many CEOs themselves think pay is excessive.
The poll of 127 CEOs of small- and medium-sized businesses came in response to a recent report from the Canadian Centre for Policy Alternatives that found the 100 highest-paid CEOs earn $38,998 for slightly more than one day’s work. That’s about as much as the average Canadian earns in an entire year.
The respondents were split on the impact of income inequality, however. While just over half of them felt it is “wrong” when such wide income disparities occur, around the same number of business leaders felt income inequality shouldn’t be viewed as a problem. “I cannot understand why Canadians think there is something wrong with being successful and earning a lot of money,” wrote one. “CEO compensation only becomes an issue when CEOs do not provide acceptable value to the shareholders,” wrote another. High-income earners can also bring economic growth to both their companies and communities, the CEOs believe.
The respondents were skeptical about measures to fix wage gaps, fearing the cure could be worse than the disease. Indeed, CEOs were divided on whether the issue of excessive pay could ever be resolved, except on a case-by-case basis. Some want inappropriate pay matters to be addressed through stronger legal protection for the rights of shareholders. “Shareholders should have total control of salaries in all public and private companies,” wrote one CEO. An overwhelming majority rejected the notion of imposing higher tax rates on top income earners.
Ultimately, policies related to CEO pay are left with boards of directors — for better or worse. “Inappropriate CEO selection and compensation are a result of dysfunctional boards of directors,” wrote one respondent. All seemed to agree that pay should be linked to performance. “Bonuses, which are part of the package, should be tied to improvements, not just a standard payout,” according to another CEO.
Of course, pay also depends on how significant CEOs really are to their companies, and respondents couldn’t agree on that point, either. Some believed leadership could make a huge difference in the value of a company, while others were dubious. One CEO put it bluntly: “Shareholders should be smarter than to believe that it is one man or woman at the helm who makes or breaks a company.”