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).