Nov 28, 2012

Usual suspects top the exec pay list, not that they deserve it

The best performing CEOs, with the toughest jobs in super competitive sectors are able to create real earnings growth. It's the "name brand" executives who tend to deliver the worst performance and get the most pay.

Adam Schwab — Business director and commentator

Adam Schwab

Business director and commentator

The Australian Financial Review‘s annual executive salary review makes for fantastic reading — if you’re an executive or wannabe executive of a large, listed company. If you’re a shareholder, not so much. Despite going through a financial crisis, share prices falling by around 40% since their 2007 highs and the much vaunted “two strikes” rule, it appears boards are unwilling to show a great deal of restraint in paying their top brass.

The Australian experience isn’t altogether different to what has happened in the US. As Bill Bonner noted: “The Economic Policy Institute calculates that the typical worker got a real salary increase of only 5.9% over the last 30 years … But executive pay rose 127 times as much. Today, the execs earn about 206 times as much as the workers. Why? Are executives really so much more valuable than they used to be?”

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