CEO pay and performance

A new study by MSCI relates the highest-paid CEOs with the lowest shareholder value.

Image taken from The Independent

 

MSCI researchers Ric Marshall and Linda-Eling Lee compared the salaries of 800 US-based CEOs in large and medium-sized companies with the returns to their shareholders during their board tenure. They find that a high CEO pay did not correlate with higher returns.

In fact the “highest paid [CEOs] had the worst performance by a significant margin“. On the other hand the lowest-paid CEOs were the ones who “more consistently displayed higher long-term investment returns”.

As Peter Yeung writes on his article for The Independent,

The study, carried out by corporate research firm MSCI, found that for every $100 (£76) invested in companies with the highest-paid CEOs would have grown to $265 (£202) over 10 years.

But the same amount invested in the companies with the lowest-paid CEOs would have grown to $367 (£279) over a decade.

The MSCI study is available online (no subscription required).

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Pity The Nation

American poet, painter, liberal activist, and co-founder of the legendary City Lights Booksellers & Publishers in San Francisco, Lawrence Ferlinghetti wrote this poem in 2007.

 

Pity The Nation

Pity the nation whose people are sheep,
and whose shepherds mislead them.
Pity the nation whose leaders are liars, whose sages are silenced,
and whose bigots haunt the airwaves.
Pity the nation that raises not its voice,
except to praise conquerors and acclaim the bully as hero
and aims to rule the world with force and by torture.
Pity the nation that knows no other language but its own
and no other culture but its own.
Pity the nation whose breath is money
and sleeps the sleep of the too well fed.
Pity the nation — oh, pity the people who allow their rights to erode
and their freedoms to be washed away.
My country, tears of thee, sweet land of liberty.

Belief bias

We tend to update some of our beliefs while holding on to others. Why? Essentially it about applying Bayes’ Theorem to our own belief systems!

Listen to the podcast from You Are Not So Smart, with Julia Galef and Neil A. Manson. She is the president and co-founder of the Center for Applied Rationality and he is a philosopher and professor at the University of Mississippi.