Well-Paid CEOs Do a Lousy Job, Report Finds

Better Investing

What's Hot

How to Cut the Cable TV Cord in 2017Family

8 Major Freebies and Discounts You Get With Amazon PrimeSave

8 Creative Ways to Clear ClutterAround The House

Study: People Who Curse Are More HonestFamily

This Free Software Brings Old Laptops Back to LifeMore

Pay $2 and Get Unlimited Wendy’s Frosty Treats in 2017Family

The 3 Golden Rules of Lending to Friends and FamilyBorrow

6 Reasons Why Savers Are Sexier Than SpendersCredit & Debt

Resolutions 2017: Save More Money Using 5 Simple TricksCredit & Debt

Porta-Potties for Presidential Inauguration Cause a StinkFamily

Protecting Trump Will Cost Taxpayers $35 MillionFamily

7 New Year’s Resolutions to Make With Your KidsFamily

5 New Year’s Resolutions That Will Pay Off 10 Years From NowCollege

10 Tasty Alcohol-Free Drinks That Adults Will LoveFamily

10 Simple Money Moves to Make Before the New YearFamily

Could Your Pet Benefit From Marijuana-Laced Treats?Family

The best-paid CEOs preside over companies with worse-performing stocks, according to a new report.

The best-paid CEOs preside over companies with worse-performing stocks, according to a new report by investment research firm MSCI.

The report looked at the pay of 800 CEOs at 429 large-cap companies between 2006 and 2015. It found that CEOs who received higher levels of incentive-based pay led companies that recorded below-median stock returns.

Meanwhile, companies that incentivized CEOs below the sector median “outperformed those companies where pay exceeded the sector median by as much as 39 percent.”

Based on these findings, MSCI reached a stark conclusion: “Has CEO pay reflected long-term stock performance? In a word, ‘no.'”

The report notes that a typical CEO gets about 70 percent of compensation through stock incentives. The trend toward paying CEOs equity-based incentive pay has been in place for three decades, but has not benefited companies — or people who invest in them. According to the report:

We found little evidence to show a link between the large proportion of pay that such awards represent and long-term company stock performance. In fact, even after adjusting for company size and sector, companies with lower total summary CEO pay levels more consistently displayed higher long-term investment returns.

For example, an investor who purchased $100 of stock in the companies that compensated their CEOs in the top 20 percent of the study group was likely to see the investment grow to $264.76 over 10 years.

By contrast, an investor who purchased $100 of stock in the companies that compensated CEOs the bottom 20 percent of the ranking was likely to end up with $367.17 over that same period of time.

What is your take on CEO pay? Let us know why by commenting below or on our Facebook page.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: The 10 Commandments of Wealth and Happiness

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,901 more deals!