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Marketplace

Corner office cuts

Andrea Gardner Jul 31, 2006
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MARK AUSTIN THOMAS: A paycut for CEOs? A new study out today from Cornell University and the World Bank suggests there’ve been some changes in compensation. Andrea Gardner explains why


ANDREA GARDNER: After the Enron collapse, the NYSE and Nasdaq rolled out new requirements for their listed companies.

Most notably, the majority of a company’s board of directors can have no financial ties to the company. And executives can no longer attend board meetings where their compensation is discussed.

Today’s report shows CEOs are feeling the changes in their wallets.

Study author Yaniv Grinstein compared companies that were compliant before the new rules, to companies that weren’t. He found that the non-compliant companies have since lowered CEO pay by as much as 25 percent.

YANIV GRINSTEIN: These changes actually made a difference in compensations decisions.

Even though CEOs are getting fewer stock options, their salaries have for the most part stayed the same.

I’m Andrea Gardner for Marketplace.

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