How to determine executive compensation remains a hot issue, with a recent Institutional Shareholder Services survey showing executive pay is the top governance issue for institutional investors. Meanwhile, a research paper from the University of Delaware’s John L. Weinberg Center for Corporate Governance has focused debate on the standard practice of benchmarking CEO compensation by looking at a group of similar companies, which it argues leads to escalating pay levels. 

Charles Elson, chair of the Weinberg Center and co-author of the study, says selecting the companies to include in a peer group invites manipulation of the results, while the fact that compensation is typically set at the 50th, 70th or 90th percentile level found in the peer group “leads to a ratcheting up of all CEO salaries.”  

Most importantly, the basic premise—the notion CEOs can easily move from one company to a competitor—is not accurate, Elson argues. “There is really no external market for CEOs. The skills of a chief executive are company-specific, involving experience, the relationships with other managers and executives and the culture of the company, and the odds of a CEO leaving a company over compensation are slim to none.”

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?


NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.