Challenge

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Fair Executive Pay as Performance Rises

Recent research documents the public discontent with high income inequality yet an important limitation in our understanding is why such high pay is problematic according to many Americans. Evaluating the relationship between performance and fair CEO pay may reveal more about the roots of wealth disparity.
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Nature and Context

The American discontent with extremely high CEO pay stems mainly from a belief that CEOs are not contributing highly enough to merit such high pay. Additionally, extremely high pay is seen as being objectionable in principle. Discontent with extremely high pay may be reconciled with support for pay for performance: the slope of the pay and performance function may be at issue rather than a hard limit on pay.

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