Americans Grossly Underestimate CEO Pay, Stanford Study Finds

STANFORD (CBS SF) – Most Americans underestimate how much CEOs earn, but also believe that excessive pay is a problem, according to researchers at Stanford.

In a survey of more than 1,200 people across the country (.pdf), researchers at the school's Rock Center for Corporate Governance found the typical American believes a CEO earns $1 million in pay, when the average CEO pay is actually $9.3 million and median reported compensation is about $10.3 million.

Researchers found one's earnings affected their perceptions of what a CEO makes. Respondents in the survey who were lower income ($20,000 and below) believed CEOs earned $500,000, while those who earned $150,000 or more believed CEOs earn $5 million.

"CEO compensation figures are much higher than the public is aware of," Professor David F. Larcker of Stanford Graduate School of Business said in a university statement. "In many parts of the country, it is incomprehensible that anyone can earn this much money."

While many Americans underestimate CEO pay, 74 percent of those surveyed believe that CEOs are overpaid and 70 percent said CEO compensation is a problem.

When asked for solutions, nearly two-thirds surveyed (62 percent) believe there should be a maximum amount a CEO should make relative to an average worker. But only about half of respondents said the government should do something to change executive pay practices.

In 2014, state Sens. Mark DeSaulnier and Loni Hancock proposed a bill that would have tied a publicly traded company's corporate tax rate to executive compensation. The bill was voted down.

Tim Fang is a digital producer for CBS San Francisco and a native of the Bay Area. Follow him on Twitter @fangtj.