> Overpaid relative to what? Your estimation of perceived value? What do you define as value? How would you even begin to empirically establish what you're saying?
Some research has been trying to answer these questions, for example the MSCI study [1]. Anyone can play around with the collected data of public companies, for example the WSJ data model is kind of nice [2].
As a passive index small-time investor, this is of keen interest to me. My theory is passive indexing can potentially be supplemented in the future by specific value-oriented long-term Buffett-style investments in companies that establish a track record of promulgating a culture that successfully selects CEO's who deliver sustainable (5+ years) returns to shareholders, and CEO compensation linked tightly to such results is one of the signaling indicators I look for to draw attention to such possible organizations. Thus far in the US, I see very few companies who can pull this off, and unfortunately, they are all private, and precise returns are fuzzier than public companies and only theoretical.
I do not need five sigma results to discern actionable data. But the consistently relatively poor performance of CEO compensation to sustainable shareholder returns is one of my confirmation signals that passive broad indexing still works (like some fellow passive indexers, I believe under some specific conditions, the strategy will not work). If price discovery is broken in the CEO compensation market, then I'm better off ignoring it until it works.
Definitely YMMV. My style is not your style. Investing isn't my day job, and it isn't even my hobby; it is simply a facet of modern current life that I carry out as a duty, like flossing. I select for a strategy that can return results I can relatively count upon over long (20+ year) periods, with very little personal time ([1] http://chiefexecutive.net/higher-ceo-pay-produce-better-comp...
[2] http://graphics.wsj.com/ceopay-2015/