Nighttime Must-Read: Eric Chemi and Ariana Giorgi: For CEOs, Correlation Between Pay and Stock Performance Is Pretty Random

Eric Chemi and Ariana Giorgi: For CEOs, Correlation Between Pay and Stock Performance Is Pretty Random: “With all the public chatter about exorbitant executive compensation and income inequality…

…it’s useful to look at the relationship between chief executive officer pay and corporate performance. Typically, when the subject of their big pay packages arises, CEOs—usually through their spokespeople—say they are paid for performance. Does data back that up?… Equilar ranked the salaries of 200 highly paid CEOs. When compared to metrics such as revenue, profitability, and stock return, the scattering of data looks pretty random…. Check the comparison of the ranking of the 200 CEOs Equilar looked at to their company’s stock returns…. If ‘pay for performance’ was really a factor in compensating this group of CEOs, we’d see compensation and stock performance moving in tandem…. They certainly wouldn’t look like this: