Rising Stocks Enough to Justify Executive Pay?

Executive Payouts

Just because a corporate stock price is on the rise, is that justification enough for the huge payouts executives receive?  While shareholder returns are usually the most prominent factor considered by corporations when determining executive pay, many elite business school educators and industry experts don’t think they should be.  They contend that executives regularly profit off short-term bullish markets where returns had little or nothing to do with their operations, strategy or lack of innovation.  In an interesting piece by The New York Times, experts suggest that executive pay should be tied more closely to what management did to increase the value of the company, rather than the value of the stock, and that project innovation and returns on invested capital, among other criteria, should carry more weight.