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Highest-Paid CEOs Run Worst-Performing Companies, Research Finds (independent.co.uk)
An anonymous reader writes from a report via The Independent: According to a study carried out by corporate research firm MSCI, CEO's that get paid the most run some of the worst-performing companies. It found that every $100 invested in companies with the highest-paid CEOs would have grown to $265 over 10 years. However, the same amount invested in the companies with the lowest-paid CEOs would have grown to $367 over 10 years. The report, titled "Are CEOs paid for performance? Evaluating the Effectiveness of Equity Incentives," looked at the salaries of 800 CEOs at 429 large and medium-sized U.S. companies between 2005 and 2014 and compared it with the total shareholder return of the companies. Senior corporate governance research at MSCI, Ric Marshall, said in a statement: "The highest paid had the worse performance by a significant margin. It just argues for the equity portion of CEO pay to be more conservative."
Why do these people keep doing the same reports year after year? Every previous report has said the same thing.
From 2009
August, 2013
August 2013 again
September 2013
June 2014
We don't need any more studies to state the obvious.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
Why do we pay ceos so much moeny anyways by the time any decision reaches them it has been summarised into an a4 sheet of apaper stating pros , cons and bottom line on which they then make a yes\no decision, With their golden parachutes its not even like they carry the can if they get that 50, 50 wrong.
You don't even have to get to the CEO level to find employees who no matter what they decide, are beyond the consequences of their actions. I know because I have worked for a lot of them, trust me, shit rolls down hill and the real experts are the ones that never get above the poverty level unless they learn to play the "Game" of politics, back stabbing and being generally underhanded. The people who argue against this.. in general are the types that start the shit ball rolling.
There have been other studies that came to similar conclusions.
Apparently the higher the pay goes, it hits a maximum performance incentive, then causes a negative effect as it continues to climb.
Short version, most American CEOs are paid WAY more than would be optimal.