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Are U.S. CEO's overpaid?
March 19, 2005 12:46 PM

During the period of 1993-2002, had the relationship of compensation to market capitalization and industry classification remained the same, mean compensation would have increased by less than 20% of its actual increase.

This is from a recent study by Lucian Bebchuck (of Harvard) and Yaniv Grinstein (of Cornell).

They state further:

During 1998-2002, the aggregate compensation paid by public firms to their top-five executives was about 10% of the aggregate profits of public firms, up from about 6% during 1993-1997.

A large part of the problem, as well, is that U.S. Corporations are not democratic. In fact, they are typically socialistic in character, with CEO compensation determined by "peers" who sit as board of directors. The only way to institute real change is by removing them. Although extremely difficult to acheive, it's not impossible to change the board, as this study by Mr. Bebchuck lays out.

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