Although this wasn't the purpose of the research, the study provides an unexpected endorsement of the benefits of public education. One school produces CEOs who are paid, on average, more than five times what Harvard, Stanford and Wharton CEOs take home. And it's a public university with in-state tuition of $4,830 a year.
The Relationship Between CEO Pay and Pedigree: Not What You Think
Terrance Jalbert and Kimberly Furumo, both of the University of Hawaii at Hilo, and Mercedes Jalbert, of the Institute for Business and Finance Research, examined the educations and salaries about 6,000 big-company CEOs each year from 1997 to 2006. It's no surprise that Ivies dominate; of the 6,000 plus CEOs in the survey, 722 hold a Harvard degree, 240 hold a degree from University of Pennsylvania (including Wharton). Next came Stanford, with 239, Princeton University, with 183 (largely due to its undergrads). Most of the CEOs with grad degrees came from top-50 ranked schools.
But the surprises came when the researchers looked for correlations between CEO education, salary, and firm performance. Here's what they found:
- Harvard-educated CEOs earn among the least. In fact, the schools with the most CEOs do not produce the most highly-paid CEOs. Harvard-educated CEOs made an average of $9.4 million a year, near the bottom of the top-50 schools list. University of Pennsylvania-educated CEOs made, on average, $11.5 million, about the same as those from Stanford.
- CUNY-Queens produced the best-paid CEOs, at an astounding average annual salary of $59.2 million. CEOs from CUNY-City did pretty well too, bringing in an average salary of $21 million year. (These numbers, like those above, combine those who hold bachelor's degrees with those who hold graduate degrees). It is possible that in the case of CUNY-Queens, one or two really well-paid CEOs skewed the average upward. The school didn't rank in the top 50 CEO-producing schools, and the paper doesn't say how many CEOs it produced. But there's no arguing with CUNY-City's numbers. Its CEOs earned about twice as much as Harvard grads, and the school produced plenty of CEOs: Some 79 CEOs got an undergraduate degree there, and 17 held a graduate degree from the school (some CEOs got both their bachelor's and their graduate degrees from the same school).
- Among graduate schools, CUNY-City's CEOs were the best-paid, earning $44.9 million a year on average.
- Company founder-CEOs earn higher pay. CEOs who are also founders of their companies make, on average, about $5 million more than other CEOs.
- Ivy League training had no impact on company performance. The researchers found no strong evidence that the school a CEO attended had any impact on company performance.
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Kimberly Weisul is a freelance writer, editor and consultant. Follow her on twitter at www.twitter.com/weisul.