C.E.O.’s and the Pay-’Em-or-Lose-’Em Myth – New York Times 09-22-12

Salient to Investors:

Charles Elson and Craig Ferrere at the University of Delaware say CEOs can’t readily transfer their skills from one company to another, debunking the “pay ’em or lose ’em” defense. They say the idea that companies must constantly compare their executives’ compensation with that of similar companies is bogus. They find little evidence that a hot market exists for interchangeable CEOs, and say that CEOs selected from within a company perform better than outsiders, especially in creating of long-term shareholder value.

Elson said that CEO skills are very firm-specific – CEOs don’t move often but when they do, they’re flops.

Read the full article at http://www.nytimes.com/2012/09/23/business/ceos-and-the-pay-em-or-lose-em-myth-fair-game.html?nl=todaysheadlines&emc=edit_th_20120923&moc.semityn.www