Wages

Executives: More pay for less work

The research, carried out by a team of academics headed by Dr John Shields from the University of Sydney's School of Business, gauges the performance of Australia's Top 100 companies in light of CEO remuneration.

The research finds the often-stated link between high executive pay and company performance does not exist. Against three criteria: return on equity, share price change and change in earnings per share, statistical analysis shows that high executive pay levels actually coincide with a lower bottom line.

The authors find that once executive remuneration exceeds 24 times the average wage, the performance of a company begins to deteriorate.

NSW Labor Council secretary John Robertson said the research takes the debate about executive remuneration to a new level.

"This research shows that executive pay is not just a moral issue; it is a shareholder issue and it is a job-security issue.

"For workers, it shows that an excessively paid CEO is likely to preside over a weaker company, meaning their jobs are less secure.

"It also raises significant questions about whether superannuation funds should be investing in companies who pay their CEOs outside the 1:24 matrix."

© 2001 Community & Public Sector Union - State Public Services Federation (CPSU-SPSF) - National Office

http://www.cpsu-spsf.asn.au/campaigns/public_sector_wages/20030523_136.html
Last Modified: 15 Nov 2005