Just about any way you look at it, CEO pay
is outrageous.While chief executive officers say
their pay is linked to company performance, many CEOs receive large
paychecks and bonuses even while the company’s performance suffers. Want
to see if your CEO’s pay package is related to company performance?
Here’s how to find out:
The Yahoo search site has a section that
provides the latest information on your company’s financial performance.
You can look up what all the terminology means using Yahoo’s
financial glossary. Search for your company’s name to find out:
Your
company’s most recent stock price. You can view a graph of your
company’s stock performance. The share price reflects investor
confidence (or lack thereof) in your CEO’s performance. Is the stock
price trading near the high end or the low end of its 52-week range? You
also can click on “Insider” to see if your executives are buying or
selling shares, a good indication of how they view your company’s
prospects. Or click on “News” to get the latest business stories dealing
with your company.
Profile of your company’s
financial data. Take a look at some of the common financial ratios
that investors use to evaluate your company. You can see how profitable
your company is by looking up its Profit Margin: the percentage of
income earned on your company’s sales. Or look at a common measure of
management effectiveness known as Return on Assets: the percentage of
income earned by your company’s assets.
What the
analysts recommend. Find out if Wall Street analysts are
recommending that investors buy, sell or hold your company’s stock.
Because analyst recommendations tend to be overly optimistic, be sure to
compare the consensus recommendation with an industry average. Also,
you can get a sense of your CEO’s recent performance by whether the
analysts are upgrading or downgrading your company’s stock. You also can
review your company’s earnings per share to find out if your CEO has
outperformed or under-performed the analysts’ predictions. A positive or
negative earnings surprise can have big consequences for your company’s
stock price.
Watch AFL-CIO President Richard Trumka discuss the 2010 Executive PayWatch. This year's PayWatch spotlights Wall Street bankers and their outrageous pay and lobbying efforts against financial reform. More Videos