Best-Paid CEOs Run Some of Worst-Performing Companies

25. July 2016

That’s what I would call “meritocracy”, isn’t it? (hfk)

Date: 25-07-2016
Source: The Wall Street Journal

Analysis by MSCI calls into question the idea that high CEO pay helps drive better results

MSCI found that $100 invested in the 20% of companies with the highest-paid CEOs would have grown to $265 over 10 years. The same amount invested in the companies with the lowest-paid CEOs would have grown to $367.

The best-paid CEOs tend to run some of the worst-performing companies and vice versa—even when pay and performance are measured over the course of many years, according to a new study.

The analysis, from corporate-governance research firm MSCI, examined the pay of some 800 CEOs at 429 large and midsize U.S. companies during the decade ending in 2014, and also looked at the total shareholder return of the companies during the same period.

MSCI found that $100 invested in the 20% of companies with the highest-paid CEOs would have grown to $265 over 10 years. The same amount invested in the companies with the lowest-paid CEOs would have grown to $367. The report is expected to be released as early as Monday. Read the rest of this entry »


Executive pay: Money for nothing?

13. January 2012

Date: 12-01-2012
Source: The Economist

Executive pay levels rise because of globalisation, not poor oversight

HARD work builds character, and should be rewarded. But many Britons believe the link between graft and gain has broken down. At the bottom, they see a dependency culture that costs them billions in welfare spending. At the top, pay for executives seems to soar regardless of the fortunes of their businesses.

Even some on the right are rounding on corporate excess. David Cameron, ever alive to the public mood, announced on January 8th that he would reform executive remuneration. His ideas include giving shareholders binding votes on the pay, perks and severance packages handed out by companies. Vince Cable, the Liberal Democrat business secretary and perhaps the most left-wing member of the coalition, is leading the raid on boardrooms.

Ed Miliband, the Labour Party’s increasingly criticised leader, wants to go even further. He argues for putting workers’ representatives on company boards and making corporate pay more transparent. Labour is the party of equality, yet the issue is a bind for him. If he is much more radical than Mr Cameron, he risks reviving his “Red Ed” reputation. If he is not, the government’s efforts will grab all the attention.

The debate over executive pay is likely to heat up over the next few months, fuelled by disclosures of bumper bonuses for bosses. The timing will be particularly embarrassing to public companies and politicians, as median real incomes are forecast to fall sharply as the economic slump continues. Read the rest of this entry »