Americans think CEOs make too much money, but investors have approved 99% of pay packages

Good morning.

While most Americans think public-company CEOs are paid too much, investors have approved 99% of CEO pay packages brought to a vote this year. Approval for Elon Musk’s record-breaking pay package is the norm.

U.S. shareholders generally agree that leadership is best measured by stock price. That philosophy underpins most pay-for-performance systems. (The say-on-pay provisions and other elements of the Dodd-Frank Act were mainly intended to avert a bias for short-term gains over long-term value.)

That U.S. public company CEOs now make nearly 200 times more than the average U.S. worker—and multiples more than peers in other countries—reflects this emphasis on equity-based incentives. U.S. base salaries and even short-term incentive bonuses are on par with other nations. Tesla hasn’t paid Musk a salary since 2019. The mammoth upside comes from stock options. That’s why George David, the then CEO of United Technologies Corp., could truthfully tell me “I’m in the middle of my peer group” the year he took home $70 million in pay.

There’s nothing wrong with incentivizing leaders to build long-term value. The question is whether it’s necessary to pay so much. People tend to judge their wealth relative to their peers, which may be why CEOs in the U.K. are now pushing for U.S.-level compensation. They see their U.S. industry counterparts getting vastly higher rewards for delivering similar results—just look at the oil and gas industry—and think it’s not fair. In the case of former Nissan Renault CEO Carlos Ghosn, the resentment over pay gaps ran so deep that it reportedly clouded his judgement.

There’s no easy answer here. Investors hate to rock the boat when their fortunes are rising, too, and they’re less inclined to begrudge leaders their billions when they founded the company.

But it’s worth considering what motivates leaders to build great companies that have a lasting impact and sustainable profitability. When I first interviewed Elon Musk almost 15 years ago, his goal was to enable human habitation on Mars and solve tough technical problems. Money was simply a means to getting things done.

Maybe that’s still the case, and it doesn’t matter how much he’s paid as long as his investors get rich along the way. But populist leaders thrive in environments where people think the system is unfair, and employee engagement has long been tied to the same. People don’t work as hard when they feel their workplace is inequitable and too many of the rewards are being claimed by too few at the top.

Curious to get your thoughts. More news below.

Diane Brady
diane.brady@fortune.com
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This story was originally featured on Fortune.com