US chief executives 'are overpaid'

Fortune 500 chief executives were over-remunerated by around 129 times their ideal salaries in 2008, according to a university researcher.

Venkat Venkatasubramanian of Purdue University suggested that fair pay for an average chief executive in the US - including bonuses and stock options - should stand at between eight and 16-times the lowest employee salary.

However, the scientists calculated that the current ratio of executive to employee remuneration in the US is as high as 344-to-one.

Raising concerns over the ability of the market to regulate fair executive pay, Mr Venkatasubramanian claimed that fairness is a fundamental principle of an efficient economic system.

Published in the journal Entropy, the paper What is Fair Pay for Executives suggested that the US government should seek to replicate the average chief executive ratios found in Japan, France, Canada and Britain.

Mr Venkatasubramanian said: "Executive pay excesses appear to be a recent phenomenon.

"[It] appears to be another valuation bubble - the chief executive valuation bubble - much like the ones we have witnessed in stocks, real estate, commodities."

The introduction of remuneration controls in the North American country appears remote, however, as the US pay tsar Kenneth Feinberg said last week that setting compensation guidelines must remain the preserve of companies.