Week in Review - November 15, 2023
CEO Exit Impact
In a world where CEOs are always paid exactly what they’re worth and boards have enacted perfect succession plans, stock prices wouldn’t swing much when a CEO passes away unexpectedly. However, sometimes they go up, according to new academic research.
When that happens, “the wrong CEO was in office, or that the CEO was paid much more than justified by their contribution to the firm,” one researcher told Agenda. In the study of 449 CEO deaths, stock price increases were most pronounced when the CEO was older and had a longer tenure than average.
The study shows boards need to be tougher about keeping pay in line with performance for chief execs and more aggressive about removing CEOs who are no longer up to task, sources said.
Pay Ratio Tax
Federal lawmakers have introduced a bill that would levy an excise tax on large companies with a CEO-to-worker pay ratio of 50:1 or greater. That’s a much smaller gap than the average annual pay ratio among the top 350 largest firms, which stands at 344.5:1, according to the Economic Policy Institute.
Further Reading
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