We're talking about Executive Compensation on Tuesday. I encourage you to watch these videos to make the topic more real for you. This first one is from Forbes. It's about CEO pay in the 500 largest companies. The video is in the middle of the page. One obvious fact that emerges from this is that the bulk of the pay is from the cashing in of prior accumulated stock or stock options. Some of these CEOs take very little in salary. Another interesting thing is how Forbes measures company performance - by growth rate in stock share value over an extended period. This makes sense if the market evaluates the company's balance sheet accurately.
The other video is from the NewsHour last Wednesday, about Citigroup Shareholders rejecting a pay package for their CEO. This is news worthy because of its novelty. Indeed, M&R says this can't happen, that it's the Board that sets CEO compensation, the shareholders having no say in the matter. But that has changed recently as a consequence of Dodd-Frank regulation. It's certainly interesting to ask whether this new form of governance will have a retarding impact on CEO compensation, particularly at companies that don't perform well by the Forbes metric.
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