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Pay for Performance? Sometimes, but Not Always |
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Author(s):
Tommy McCall |
Institution:
The New York Times |
Year:
2006 |
URL:
http://tinyurl.com/mh3dj |
Project Description:
Part of a series of Executive Compensation Tables by The New York Times, this impressive chart produced by Tommy McCall, titled "Pay for Performance? Sometimes, but Not Always", shows how chief executive pay changed against the shareholder return.
At many companies, changes in chief executives' pay roughly corresponded with changes in their shareholders' total return in the year 2005. Several exceptions were in favor of shareholders, but most of the outliers favored CEO's.
Part of the same series is an Interactive Graphic showing Executive pay statistics for 2005.
Source: Pearl Meyer & Partners.
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Comments (1):
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What this doesn't show is how earnings are calculated. W2 reported earnings include base pay as well as stock options. A CEO that decided to cash out some number of stock options is going to show a spike in earnings independent of the share price. Such comparisons are invalid because they don't represent his performance based compensation (base salary + bonuses) and thus if the stock has a spike next year, but he cashes in few options, the graph puts him to the bottom right.
Posted by Steve S. on Mar 12, 2007 at 4:05 AM (GMT)
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