Strome Business Minute With Dr. Jeff Tanner

I’m Jeff Tanner and this is a Strome Business Minute. One University of Georgia and two Notre Dame professors recently found that CEOs who were hired and paid at an above market rate outperformed those paid at or below market rates, with market rates weighted by company size and industry. Controlling for a number of other factors, these CEOs had a significant positive impact on their company for their entire tenure. The study focused only on the largest fifteen hundred US firms, according to Fortune magazine. What’s also interesting is that those paid below market also performed lower than the average. Given that the average annual compensation for this group was more than twelve million dollars last year and only a small difference in company performance can mean millions in stock price changes, hiring the right CEO is important. If pay is any indication, boards are making good decisions. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.