If given a choice between leading one of America’s most prestigious companies and one of the rest, you’d think the answer would be a no-brainer. But gracing the resume with a much-admired employer could come at a cost: of around $500,000.
A study by researchers at Germany’s Mannheim University, published Thursday in the Journal of Financial Economics, found that CEOs leading the cream of the crop earn an average 8% less than their peers.
The study was based on an analysis of Fortune’s annual America’s Most Admired Companies list and publicly-disclosed CEO pay data. Its final sample included 1,711 companies and 3,191 CEOs.
The researchers noted the results were backed up by other studies, such as a 2013 Australian paper that showed executive MBA students would agree to 7.5% lower pay to join the most prestigious companies.
So why are CEOs taking the pay hit? Could it be because they value their standing more than the size of their remuneration? Or are they just hoping their respected status will help them earn more money down the track?
The Mannheim researchers found the answer is more likely to do with a simple status boost, rather than any increased earnings potential. For example, they found that among companies in regions where people cared more about social status, such as Texas and California, there was a larger negative effect on CEO pay.
CEOs working for prestigious firms were indeed more likely to improve their earnings prospects, but they were also were more likely to lead, or sit on the boards, of other well-regarded companies. So any increase in salary wasn’t enough to fully make up for the difference of their earlier reduced pay.
“Executives focused on high financial rewards should probably avoid America’s most admired firms,” the study’s authors wrote in the Harvard Business Review. “Jobs at the helm of widely admired and well-governed firms are for those willing to make a financial sacrifice.”
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
2:00 - 5:00 pm
Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations.
Limited space available.
10:30 - 5:00 pm
General’s Retreat at Hermitage Golf Course
Sponsored by UBS
General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.
The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.
