Is CEO Pay Related to Company Performance?

In a recent study of top 200 companies by our firm we analyzed the relationship at large U.S. companies between performance measures in long-term incentive plans and company performance as measured by total shareholder return (“TSR”). We were surprised to find that there was no clear-cut relationship between company performance as measured by TSR growth and commonly used long-term incentive (“LTI”) performance measures like TSR, earnings per share, and capital efficiency measures like return on invested capital and economic profit