More on CEO's overcompensation

It’s becoming increasingly clear that, from a shareholder’s perspective, overpaid C.E.O.s aren’t just expensive; they’re downright destructive.

A recent article in New Yorker compiled some evidences proving points made above-

"One recent study of the market between 1992 and 2001 by economists at Rutgers and Penn State found that the more a C.E.O. was paid, relative to his peers, the more likely his company was to underperform in the stock market. The economist David Yermack, of N.Y.U., has found that companies that allow their C.E.O.s to use corporate jets for personal reasons fall short of market benchmarks by four per cent annually".

Likely in the future, big investors are treating excess compensation as a reliable index that something serious may be wrong, and make an informed decision about whether to buy or sell a stock.