Title

Is the sky the limit? Fair executive pay as performance rises

Document Type

Journal article

Source Publication

Social Problems

Publication Date

3-2-2017

Volume

Advance online publication

Publisher

Oxford University Press

Keywords

income inequality, distributive justice, executive compensation, attitudes, fair pay

Abstract

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. This study juxtaposes two explanations for the discontent that many Americans have shown regarding high Chief Executive Officer (CEO) pay: a) that 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 and b) the American discontent with extremely high pay is due to such pay being objectionable in principle. Using data from a national survey experiment (N = 989) uniquely designed to test these propositions, this study evaluates the relationship between performance and fair CEO pay. Respondents show aversion to high CEO pay while also embracing the principle of proportionality of rewards and contributions. Findings suggest that 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.

DOI

10.1093/socpro/spw050

Print ISSN

00377791

E-ISSN

15338533

Funding Information

This research was supported by funding from the Stanford Laboratory for the Study of American Values.

Publisher Statement

Copyright © The Author 2017. Published by Oxford University Press on behalf of the Society for the Study of Social Problems. All rights reserved. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Burak Ho, E. (2017). Is the sky the limit? Fair executive pay as performance rises. Social Problems. Advance online publication. doi: 10.1093/socpro/spw050