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I agree that it doesn't improve causation but it is more realistic to expect that their increase in pay strongly correlates with the S&P 500 as stock price is t
by DamnYuppie 11y ago
I agree that it doesn't improve causation but it is more realistic to expect that their increase in pay strongly correlates with the S&P 500 as stock price is the underlying vehicle of their compensation.
- criley2 11y ago>stock price is the underlying vehicle of their compensation. Would not company performance be the vehicle, and stock price simply one measure of performance? It's not like stock price and business performance are identical, it's very possible for a company to be over or under valued. Could we not say that company performance causes both stock price AND ceo pay, thereby showing that stock price and ceo pay are NOT in a causative relationship, only correlated because both are caused by actual business performance?
- notahacker 11y agoStock price is what the market thinks of company performance, not to mention the metric of company performance CEO compensation is usually explicitly linked to. I'm not persuaded of the existence of some more accurate measure of company performance than market cap that CEO compensation committees are aware of but Wall Street isn't.
- DamnYuppie 11y agoTheir bulk of their pay comes from the granting of stocks, whose value is driven by their market price. This is was the point I was basing my statement off of.