For 20 years, nearly 40 percent of the country’s top paid CEOs have been doing a crummy job—at least, that’s what one recently released report suggests.
The “Executive Excess 2013: Bailed Out, Booted, Busted,” conducted by left-wing think-tank Institute for Policy Studies (with the help of Greenpeace and the AFL-CIO), studied 241 well-paid CEOs who have ranked in the top 25 with regard to compensation for the past 20 years and compared their pay with their performance.
According to the report, while performance is traditionally defined as shareholder return, this study expanded upon that, also taking into account whether the CEO was fired, if the company had to declare bankruptcy, whether the company took part in a bailout by U.S. taxpayers, or if the company had to pay fines as a result of corporate wrongdoing.
The results were surprising: 38 percent of the 241 chief executives studied performed poorly. That bad performance included:
- 8% were ousted by their corporate boards
- 8% of their companies had to pay fines due to corporate misconduct
- 22% of their companies either collapsed or were bailed out by U.S. taxpayers
Susan Anderson, one of the authors of the report, told ABC News that she was surprised to learn how little has changed with regard to CEO compensation in the past 20 years.
“You’d have thought that after the financial crisis we’d have seen more change,” she said. “After all, we had the president saying that it was risky speculation, in part, that had gotten us into that crisis.”
One expert, however, takes issue with the survey’s results. Steven Kaplan, a professor at University of Chicago’s business school, points to the source.
“It comes from a very liberal think-tank, so I wonder if there is any bias there,” he told ABC News. “There are always outliers. Third, the overall story is simple: Corporate profits—after all executive pay—are higher today as a fraction of GDP than they have been in the last 50 years. If all these CEOs were overpaid and not doing their jobs, how could that happen. In fact, CEOs and business are doing a terrific job generating profits. So, the average CEO, arguably, has done a terrific job.”
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