The 15 Most Overpaid CEOs of Public Companies
March 5, 2019 by Bernice Napach
Even if you’re an advisor that doesn’t invest client funds in ESG, SRI or impact assets, you might want to consider these key findings from a new report, The 100 Most Overpaid CEOs 2019. The stock price of the companies with the top 10 overpaid CEOs underperformed the S&P 500 by 15.6 percentage points in 2018.
Over the past four years, companies headed by the top 10 overpaid CEOs lagged the S&P 500 by by an average 14.3 percentage points, posting an overall loss of 11% while the S&P 500 gained 3.3%.
Pay vs. Performance
The report, published by As You Sow, a nonprofit organization focused on shareholder advocacy, bases its calculations on the assumption that executive pay should be closely linked to corporate performance.
Using regression analysis, it predicts a level of CEO pay based on total return (capital gains and dividends) and return on invested capital (cash flow, adjusted for taxes, divided by the total value of capital), then compares that prediction to the actual amount paid, including bonuses, stock options and other compensation listed in proxy statements.
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