Magazine article HRMagazine

U.S. vs. European Executive Pay Gap Narrow

Magazine article HRMagazine

U.S. vs. European Executive Pay Gap Narrow

Article excerpt

Contrary to popular opinion, chief executive officers in the United States don't earn significantly more than their counterparts abroad, concludes a recent study by researchers at the University of Virginia and elsewhere.

The researchers analyzed CEO salary data from more than 1,600 companies in the U.S. and 13 European countries from 2003 to 2008. The perception of a pay divide between the United States and other countries is usually based on estimates from professional services firms, they say, but recently expanded disclosure rules made their analysis of actual salary data possible.

"We show that conventional wisdom is wrong," they wrote in their research paper, "Are U.S. CEOs Paid More? New International Evidence," published in the February edition of The Review of Financial Studies.

"Initially, U.S. CEO salaries appear twice as large as salaries of CEOs in other countries, but one is really comparing apples to oranges due to differences in the way U.S. firms operate compared to their international counterparts," says Pedro Matos, an associate professor of business administration at the University of Virginia's Darden School of Business. "If you compare equivalent firms-the same size, the same industry, the same board and ownership structure-you find the gap is very small. …

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