Why you should slash your CEO’s salary

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Companies may be reconsidering their compensation schemes after a second report was released this week highlighting the shortcomings of the highest-paid CEOs.

Statistical analysis released by employee review site Glassdoor has revealed an undeniable link between the highest-paid CEOs and those with the lowest approval ranking.

"No matter how you look at the data, we found a negative link between CEO pay and CEO approval ratings,” confirmed Andrew Chamberlain, Glassdoor's chief economist.

In order to account for size variation between companies, Glassdoor measured pay as a percentage of company assets before comparing it to approval ratings.

Interestingly, employee ratings are at their highest among the CEOs who take home next-to-nothing on an annual basis – often founders who own significant stock.

The scores then dip initially, rise slightly toward the median, and then fall off at a much greater pace as the paydays become more extreme.

The study comes just weeks after an earlier report found that the highest-paid CEOs actually drove less profit for their respective companies.

Carried out by corporate research firm MSCI, the study found that for every $100 invested in companies with the highest-paid CEOs, that figure would have grown to $265 over 10 years.

However, the same amount invested in companies with lower-paid CEOs would have grown to $376 over 10 years.

“The highest paid [CEOs] had the worst performance by a significant margin,” confirmed senior corporate governance researcher Ric Marshall. “It just argues for the equity portion of CEO pay to be more conservative.”

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