Overpaid for Underperforming

100 Most Overpaid CEOsBy Rosanna Landis Weaver, Manager, Executive Compensation Program

February marked the release of our third annual 100 Most Overpaid CEOs report. The biggest takeaway from our research is that overpaid CEOs appear to be a fundamental leading indicator of both future corporate risk and lagging shareholder return. In other words, pay does NOT equal performance, and overpaid CEOS can be really bad for business. Since we started doing this research back in 2014, the companies listed in our first report have underperformed the S&P 500 by 4%; the 10 companies that most egregiously overpaid their CEOs underperformed by 10%, with an aggregate return of minus 5% — yes, the companies with the most overpaid CEO’s lost 5% of company value. Overpaid CEOs tend to be insulated from shareholder votes because the majority of the large mutual funds and many pension funds rubber-stamp these outrageous compensation packages. The good news is that since we started reporting on this issue we are seeing movement — but not enough and too slowly. We will persist until we see across-the-board pay equity.