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Are CEOs Overpaid?
Mark Anderson, University of Texas at Dallas
Rajiv D. Banker, Temple University
Rong Huang, Baruch College City University of New York
Jiangxia Liu, Western Carolina University
ABSTRACT. Recent articles in both the business press and academic literature question whether CEOs are paid excessively for their contributions to firm performance. We address this question by evaluating the relative contribution of CEOs to firm performance using other top-five executives as the comparison group. We find that, while CEOs receive significantly higher compensation than other top executives, the per-dollar-return to shareholders from CEO compensation is significantly lower than the per-dollar-return from other top executive compensation. We show that the overpay phenomenon is robust over years and across industries. We also find that female executives are paid less than male executives and that the per-dollar-return to their compensation is higher than the reference group of male top executives.
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