More executives think CEO pay is too high: study

By Chelsea Emery

NEW YORK (Reuters) - In another sign of growing demand for tightened oversight of CEO compensation, more executives are saying the heads of their companies are paid too much, according to a global survey released on Tuesday.

As outrage grows against what many perceive as exorbitant pay packages for underperforming chief executives, top employees at the companies are also airing their dismay.

Thirty-four percent of respondents to the survey by executive recruiter Korn/Ferry International expressed concern about their CEOs' compensation. That compares with 21 percent a year ago.

"If executives believe that CEO pay is appropriately set in relation to performance, they don't have concerns," said Russell Miller, managing director of Korn/Ferry's Executive Compensation Advisors. "But when there's a perception that pay is in the absence of performance, concerns are raised."

Four out of five executives said shareholders should have some say on pay, and 55 percent said their CEOs' compensation did not reflect or was only "somewhat" reflective of the companies' results.

"You want to see someone get awarded for performance, not for longevity," said Clover Capital Management fund manager Matthew Kaufler, who considers executive pay packages before buying a company's shares. "Ideally you want to see aggressive but reasonable thresholds that need to be met."

An average 827 executives from more than 50 countries responded to Korn/Ferry's questions on executive pay trends.

CORPORATE CHANGES

There are some signs, however, that companies are becoming better at linking CEO pay with their performance and growth.

While the median compensation for U.S. large-company chief executives who had been in their jobs at least two years increased 1.3 percent last year to $8.8 million, the rate of growth has slowed, according to a report from Equilar, an executive compensation research firm.

Indeed, the 2007 pay package for conglomerate Honeywell International Inc CEO David Cote slipped 2 percent from the year before, to $19.6 million, according to Equilar data.

"Pay packages reflect the turbulent situation right now, in that the bonuses are down across the board," said Equilar analyst Alexander Cwirko-Godycki.

Korn/Ferry's Miller said companies were working to change the perception that top executives were paid too much when the company wasn't performing well.

"They're working to reduce the pay as you leave and increase the pay for performance while you're there," he said.

(Editing by Lisa Von Ahn and Braden Reddall)