The survey also found widespread unhappiness among directors regarding disclosure rules about executive compensation mandated by the U.S. Securities and Exchange Commission. The rules were unveiled with great fanfare to give investors and corporate watchdogs better, timelier information about pay and other compensation for top executives. Despite those intentions, most directors said they doubt the rules are meeting the needs of investors.

"Executive compensation and how that information is disclosed have been controversial for some time. But what this survey unmistakably shows is that the issues are a growing concern even among the people most responsible for dealing with them: the board members of public companies," said Dr. Ed Lawler, CEO director and a distinguished professor of business at USC Marshall.

The survey, now in its 11th year, covered:

• CEO compensation
• Pay differences between the CEO and other members of a company's management team
• SEC-mandated executive compensation information reported in proxy statements

Among the respondents, 15 percent were internal directors while 85 percent were external. The average annual revenue of participating companies was $6.8 billion.

Key survey findings were:

Concern about level of CEO compensation on the rise

On the broad subject of CEO compensation, approximately three out of 10 respondents (32.2 percent) think that CEO compensation is "too high in most cases." This represents a significant increase over the response of board members in the years from 1998 through 2001 when just 25 percent of board members thought it was too high.

CEOs who responded were much less likely to believe CEO compensation is too high than were non-CEO board members.

Just more than half (51.8 percent) of all respondents, however, indicated that compensation for top executives is "about right except for a few high profile cases."

As in the 2006 survey, board members see the actions of compensation consulting firms and the creation of new incentive compensation programs as the major reason for the continuing increase in CEO compensation.

"It is interesting that even though it is boards that determine the level of executive compensation, they still point to the important role consulting firms play," said Ted Dysart, Managing Partner, Americas, Heidrick & Struggles' Global Board of Directors Practice.

CEO pay versus next-highest executive: Boards say, "No more than three times higher"

There was broad consensus about the subject of the pay difference between the CEO and other members of the company's management team. Nine out of 10 respondents thought that CEO pay should be no more than two to three times higher than the next highest paid executive. Eighty-five percent believe that the difference is about right in their own firm today.

Added Dysart: "We found near complete agreement on this topic. By far most of our respondents believe CEO pay should be in the range of two to three times the next highest paid executive."

Board members dissatisfied with SEC-mandated executive compensation information reported in proxy statements

The survey found that public company board directors are dissatisfied with the new SEC-mandated executive compensation information in proxy statements.

• Only 11.6 percent of respondents agreed -- to a "great" or "very great extent" -- that SEC-mandated executive compensation information reported in proxy statements was easily understood.
• Further, only one in 10 respondents believed this information did a good job of explaining how compensation decisions are made.
• While there is broad agreement that companies should continue reporting executive compensation information according to current mandated SEC regulations, only 11.2 percent agreed that this information served investors well.
• Fewer than three out of 10 respondents (27.8 percent) agreed the proxy statements provide valuable information about the amount of executive compensation.

Added Lawler: "While more disclosure is generally viewed as a good thing, most board members find that what is made available today is difficult to understand, lacking in context and generally not effective for informing investors and other company stakeholders."

About the University of Southern California's Center for Effective Organizations

The University of Southern California's Marshall School of Business is a private research and academic institution committed to educating tomorrow's global leaders and is ranked as one of the country's top schools for accounting, finance, entrepreneurship, and international business studies.

The Center for Effective Organizations (CEO) in the Marshall School of Business actively involves corporations in developing new and useful knowledge about how organizations can be more effective in highly competitive environments. CEO's pioneering research in the areas of organizational design and effectiveness has earned it an international reputation for research that bridges the gap between academic theory and management practice. For more information about CEO, please visit http://ceo-marshall.usc.edu.

About Heidrick & Struggles International, Inc.

Heidrick & Struggles International, Inc. is the world's premier provider of senior-level executive search and leadership consulting services, including talent management, board building, executive on-boarding and M&A effectiveness. For more than 50 years, we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, Heidrick & Struggles leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific. For more information about Heidrick & Struggles, please visit http://www.heidrick.com.

SOURCE Heidrick & Struggles International, Inc.

http://www.heidrick.com