The Highest-Paid CEOs Are The Worst Performers, New Study Says, por Susan Adams (Forbes):
Across the board, the more CEOs get paid, the worse their companies do over the next three years, according to extensive new research. This is true whether they’re CEOs at the highest end of the pay spectrum or the lowest. “The more CEOs are paid, the worse the firm does over the next three years, as far as stock performance and even accounting performance,” says one of the authors of the study, Michael Cooper of the University of Utah’s David Eccles School of Business. (...)Performance for Pay? The Relation Between CEO Incentive Compensation and Future Stock Price Performance, por Michael J. Cooper, Huseyn Gulen e P. Raghavendra Rau:
Another counter-intuitive conclusion: The negative effect was most pronounced in the 150 firms with the highest-paid CEOs.
We find evidence that Chief Executive Officer (CEO) pay is negatively related to future stock returns for periods up to three years after sorting on pay. For example, firms that pay their CEOs in the top ten percent of excess pay earn negative abnormal returns over the next three years of approximately -8%. The effect is stronger for CEOs who receive higher incentive pay relative to their peers and stronger for CEOs with greater tenure. Our results appear to be driven by high-pay related CEO overconfidence that leads to shareholder wealth losses from activities such as overinvestment and value-destroying mergers and acquisitions.[Via João Vasco / Esquerda Republicana]