real-time news and commentary for investors
Sunday, Oct 13
Should stock price be used as a benchmark for management pay?
- The NYT's Grethen Morgensen looks into whether companies should continue to use rising stock prices as one of the main considerations for corporate performance and executive compensation.
- "Seventy percent of executives' stock option gains are attributable to the market's movement as a whole," says Nell Minow of corporate governance analytics company GMI Ratings. "We are basically paying CEOs for floating on their backs when we should be paying them to win races.
- Mark Van Clieaf of Organizational Capital Partners believes a better performance measurement would be a company’s net returns on its invested capital. "Management should be providing value that exceeds its cost of capital," says Van Clieaf.