“A substantial part of American CEOs’ pay is now tied to performance. But that doesn’t mean their compensation follows their results in lockstep,” the Wall Street Journal reports.
“The Wall Street Journal’s annual pay survey looked at compensation for 300 CEOs and the returns the chiefs delivered to their shareholders. Broadly speaking, CEOs did well when their investors did. All 10 of the CEOs posting the best shareholder returns were paid more than they had been a year earlier, and all but two of the 10 worst performers got pay cuts. The results come as pressure from investors has prompted companies to tie a greater percentage of their top executives’ pay to measurable results.”
“But there were anomalous results, too, highlighting the fact that some boards’ ideas of success don’t always line up with what pays off for investors. In addition, long-term commitments like pensions and multiyear stock grants can drive pay higher even if annual performance falters.”
“Only one of the 10 highest paid CEOs ranked among the top 10% by investor performance in the survey… Meanwhile two of the 10 best paid CEOs got higher compensation even though the value of their shareholders’ investments in the company fell.”
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