The Impact Of CEO Pay

June 26, 2014 in Daily Bulletin

Elena Holodny writes that you might not always get what you pay for:

  • According to a study CEO pay is negatively correlated with stock market performance – so the more you pay a CEO the less well its share price does.
  • The effect holds true for up to three years after the CEO is paid.
  • This correlation is even stronger for CEOs given incentive pay – typically meant to tie compensation to long term company performance.
  • This relationship may be because those who are paid a lot get over confident and then make poor decisions.

Read more over here.

Source: Business Insider