New studies explore relationship between executive compensation and profitability

It’s a new year and that means time to “get your house in order,” including getting your finances working for you! As a shareowner, one of the most significant things you can do that is to encourage your US senators to get behind the recently passed “say on pay” legislation passed by the House earlier this year (HR 3269) and incorporated in the broader “Wall Street Reform and Consumer Protection Act” approved by the House last month. But wait, you say; if I want my personal finances to improve, then I want the companies I am invested in to do well, and everything I have read says that executives have to be grossly over compensated in order for the companies they lead to be profitable. So, as wrong as it is, I can accept a few exorbitantly over-compensated executives if it results in a net plus for my bottom line. And you would be wrong. According to a 12.31.2009 article on the Huffington Post, “two recent studies suggest that lavish CEO compensation may in fact undermine shareholder wealth.” To read more about these two studies go to: http://www.huffingtonpost.com/2009/12/31/high-ceo-pay-may-correlat_....