'CEOs worth their huge pay packets'

WASHINGTON: Do CEOs deserve their huge salaries? 'Yes', a good chief executive is not only worth his or her whopping pay packet, but it's also vital to ensure business success, says a new study.

The international study, led by Massey University, has found that even in cases where CEOs are removed from their positions, they are nevertheless likely to move on to bigger and better paid jobs.

Researchers have claimed that CEOs leaving jobs shows if the company has been performing better than its competitors then the market reacts more negatively to news of the chief's departure in anticipation of shareholder wealth loss.

Dr Candie Chang, who led the study, has said that a good chief executive officers are their high salaries, bonuses and stock options, despite the somewhat jaundiced public view of high profile excesses revealed during company collapses of recent years.

For the study, the researchers analysed 298 chief executive departures in the United States in the decade from 1992.

The findings suggest that the stock market associates better prior performance and higher pay with a more capable chief executive. Not only that, but the higher the pay of the departing CEO compared to other executives in the company, the more negative the stock price reaction.