Linkages Between Ceo Compensation, Net Income And Stock Prices

Calculating the economic value that a CEO contributes to the worth of a corporation is seemingly a moot point. However, recent reporting changes regarding executive compensation has attracted widespread investor and public attention to this subject. Regardless of the industry, place in the economic/industry cycle the issue of analyzing if a CEO’s annual compensation is directly correlated to yearly increases or decreases in an enterprise’s value is a topic that few outside the boards of directors’ corporate compensation committees clearly understand. The purpose of this 2015 quantitative research project was to follow-up a previous research project conducted in 2011 to investigate if any linkage exists between the annual salaries of the CEOs of public traded firms in the State of Wisconsin, USA and increases/decreases in the price of their corporations’ stock price and net income. The results of the 2015 research indicate that statistically significant relationships existed between the annual salaries of the CEOs of public traded firms in the State of Wisconsin, USA and increases/decreases in the price of their corporations’ stock price and net income. This conclusion is different from the 2011 research findings.