In our August edition of Equilar’s Executive Compensation Trends, we highlight research that we recently conducted on CEO New Hire Compensation trends at S&P 1500 companies. Two of the six key findings from our analysis include (request a complimentary copy of the newsletter):
It Pays to Come from the Outside… Sad but True
In 2008, CEOs hired externally received the highest median total compensation package in all three segments (large, mid and small caps) of the S&P 1500 index. CEOs hired externally at large-cap companies enjoyed the largest premium in pay, receiving a median pay package that was 74.3 percent larger than the median pay package for tenured CEOs in the same segment. Mid-cap companies paid the smallest premium for outside talent, paying 6.7 percent more to externally hired CEOs. Small-cap companies paid a 25.8 percent premium for external hires versus tenured CEOs at other small-cap companies.
Lack of Succession Planning – Weaker Performing Companies Tend to Hire from Outside
It shouldn’t come as a surprise that companies that have underperformed (lower TSRs) tend to look outside for a new CEO rather than promoting from within. Conversely, companies with tenured CEOs, a sign of stability, had the highest median three-year total shareholder return in each segment of the S&P 1500 index.
To read about the other key findings or request a complete copy of the study, please click here.
Wanted – General Manager to Rebuild an Entire Franchise
External Hires will be Given Equal Consideration
Personally, I’m a fan of Omar Minaya and thankful for his resurrection of the Mets several years ago by bringing in Pedro and C-Belt and creating some excitement in my wife’s hometown of Flushing. However, it’s better than even money that the Wilpons will be making major changes this fall. Without a doubt, injuries were certainly a factor in the downfall of the Mets this year. But three straight years of missing the playoffs for a team with a $150 million payroll is not going to cut it in the Big Apple. And given that the malaise and level of mediocrity goes beyond the major league ballclub and permeates throughout the farm system, we need our own Obama to bring change to our once proud Metropolitans.
So who will the Mets bring in to take us back to the Promised Land of wild card contention? When Billy Beane’s name was mentioned in a NY tabloid, I finally found a reason to once again care about baseball. What better than to bring Moneyball to the Big Apple. Kind of like the Treasury throwing TARP funds at the Mets (warrants not included). Given that Billy Beane has built a team that’s won only three fewer games than the Mets with a $50 million payroll, imagine what he could do with an extra $100 million, especially when you have contracts like Delgado and Wagner going bye-bye this year. As every Met fan knows, ya gotta believe!Tags: award grants, CEO compensation, Executive Compensation, executive compensation trends, Mets coach