The highest paid CEOs are in charge of companies that have the poorest returns

A friend sent me the following link. When are even shareholders going to say enough to grossly inflated CEO salaries? Generally speaking, the higher the CEO salary, the lower the stockholder return.

http://www.zmescience.com/science/highest-paid-ceos-usually-worst/?utm_source=ZME+Science+Newsletter&utm_campaign=e4d28ba427-ZME_Science_Daily3_6_2015&utm_medium=email&utm_term=0_3b5aad2288-e4d28ba427-242565561&ct=t%28ZME_Science_Daily11_8_2014%29

Corporate research firm MSCI correlated the salaries of around 800 CEOs with the performance of the companies they ran. That’s 429 large and medium-sized US companies in total. Not surprisingly if you follow the financial news one bit, the researchers found that at least between 2005 and 2014 a startling trend emerged: the higher the CEO’s salary, the poorer were the shareholders’ returns. Conversely, lower-paid top dogs ran companies with the highest returns.
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The report, titled ‘Are CEOs paid for performance? Evaluating the Effectiveness of Equity Incentives’, offers bleak insight into the world of today’s leading corporations which rewards failure at the top executive level and punishes workers down the corporate ladder, often through pay cuts or layoffs to offset bad management practice.

“Equity incentive awards now comprise 70 per cent or more of total summary CEO pay in the United States, based on our calculations. Yet we found little evidence to show a link between the large proportion of pay that such awards represent and long-term company stock performance,” the report noted, which found that for every $100 invested in companies with the highest-paying CEOs, returns averaged $265 over ten years. However, over the same time frame and hundred bucks, investors who chose companies ran by more modestly paid CEOs took home $367.