35 CEOs of Fortune 500 cos were overpaid 129 times last yr
New York: Chief Executives Officers of 35 US
companies in the Fortune 500 list were overpaid a staggering
129 times their "ideal salaries" in 2008, says a report.
The findings are based on a new kind of theoretical
analysis proposed by US-based Purdue University researcher
Venkat Venkatasubramanian, to determine fair CEO compensation.
Going by the analysis, in 2008 salaries of top 35 CEOs
in the US were about 129 times their ideal fair salaries.
"One of the most pressing economic and corporate
governance issues of the day is how to determine fair pay
packages for CEOs," Venkatasubramanian, chemical engineering
professor, said in a statement posted on University's website.
"The proposed theory allows us to compute what the fair
pay is for a CEO, including bonuses and stock options, under
ideal conditions," he added.
According to the analysis, the ratio of CEO pay to the
lowest employee salary has gone up from about "40-to-1" in the
1970s to as high as "344-to-1" in recent years in the US.
However, the ratio has remained around 20-to-1 in Europe
and 11-to-1 in Japan, the statement added.
"... it turns out that the same concepts and mathematics used to solve problems in statistical thermodynamics and
information theory also can be applied to economic issues, such as the determination of fair CEO salaries," he said.
Exorbitant salaries for executives has come under fire in
the wake of the financial crisis and recently, the US had
unveiled new regulations to excess pay packets.
Bureau Report