Are CEOs Really Overpaid?

Stephen D. Kirkland CPA, CMC, CFC, CFF
December 13, 2010 — 2,415 views  
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One of the most controversial questions in business today is whether Chief Executive Officers receive unreasonable compensation.  As an executive compensation consultant, I am asked this question every day.  Most people I talk to believe that CEOs are indeed overpaid.  Some people think they are ALL overpaid, even though those people may not really understand what the CEOs do.

Herein lies a great irony.  Consider this.

A survey found that 93% of CEOs believed that their communication skills were the primary factor in their being selected to become CEOs.  You see, these companies had many executives who were intelligent, experienced, well-educated, loyal and hard-working.  But at each company, only one executive rose to the level of CEO.  Superior communication skills were believed to have been the deciding factor.

I think that 93% is an amazingly high number.  Having worked closely with CEOs across the country, I would not have thought that 93% of them would agree on anything.

But there is a powerful message in that number.  Since 93% of those CEOs believed that communication skills separated them from the rest of the packs, then those CEOs must, in fact, be great communicators.

And that leads me to the irony.  If CEOs are such great communicators, why don't they do a better job of communicating their own value to their employees, their shareholders and the public?

What I have learned through my compensation consulting practice is that some CEOs have received excessive and unreasonable compensation, but certainly not all of them have.  The problem is that those who earn every penny of their pay may be so focused on running the business that they do not take time to blow their own horns.  It takes considerable time and effort to help others understand the real value of intangibles, such as a CEO's knowledge, leadership, innovative ideas, adaptability, and oratory skills. 

With the increasing scrutiny of CEO pay, the time has come for CEOs to do a better job of communicating their value, especially to their own shareholders and employees.

Stephen D. Kirkland CPA, CMC, CFC, CFF

Atlantic Executive Consulting Group, LLC

A native of Charleston, South Carolina, Stephen earned a Bachelor’s degree in Accounting at Emory University in 1981. He earned a Master of Tax Accounting at the University of Alabama in 1982. He then spent ten years with PricewaterhouseCoopers before co-founding a regional firm. In 2006, he became a member of Atlantic Executive Consulting Group, LLC.