Higher CEO Pay Doesn't Link to Better Performance

According to a new report prepared by PROXY Governance, Inc., for the Investor Responsibility Research Center Institute, "Higher relative [CEO] pay clearly has not gone hand-in-hand with superior shareholder returns. A regression analysis (R-value of 0.118) shows no meaningful correlation between higher relative pay and higher relative returns. Changes in quarterly shareholder return may be an insufficiently robust measure of changes to the intrinsic value of a firm. Additional regression analysis of relative performance on other GAAP-based performance measures, however, also found little to no correlation across the broad Russell 3000 sample."

The report looks at how companies where CEOs get paid more than company performance would justify tend to use skewed comparison samples to set CEO pay. The full report, Compensation Peer Groups at Companies with High Pay, is available at this link (PDF format).