While executive pay has always been a controversial topic, the financial crisis brought it into the very centre of discussion.

How can CEO's justify salaries in the millions, if they don't seem to lead their companies the right way?
If the high salaries are justified by higher risk, why can they still get golden handshakes, when they have to leave due to disappointing performance?

These are questions the public is asking. Politicians found they can please voters by limiting salaries for board members of banks bailed out by governments.

But, what's actually fair?

Manfred Schmitt, Professor for Psychology at Landau University in Germany, talked about fair pay in a recent interview with "Sueddeutsche Zeitung". There is no objective measure, but most people feel very strongly about fairness. A CEO's salary is generally perceived as unfair, if it's more then 10 to 15 times the average salary. This is between 400,000 and 600,000 Euros meaning that many politicians demanding limits for executive pay got the sum about right - if we take perceived fairness as the right measure.

Schmitt says, fairness is not just an abstract concept nice to have, but can have tremendous effects on workforce performance. Experiments show that employees feeling treated extremely unfair on average have 20 absence days more than employees perceiving their employers and bosses to be fair.

So, keep in mind that it's not just about the number on someone's payslip. It's about the numbers on everybody else's payslips, too and it's about understanding where these numbers come from. The relevance of these insights in the current economic situation is obvious: if you have to cut down salaries, transparency, good communication and a larger cut in executive pay will make the change much easier to manage.