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US chief executives: More money, less ability

A recent study suggests American chief executives are getting worse

Elon Musk isn't the only chief executive in the United States with a huge pay package. Photograph: Haiyun Jiang/The New York Times

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Proinsias O'Mahony
Sun Jun 30 2024 - 06:00

Elon Musk at Tesla isn’t the only chief executive earning a gargantuan pay packet, with a recent Equilar study finding the median CEO pay at S&P 500 has risen by 12.6 per cent last year, to $16.3 million (€15.2 million).

US executive pay is especially high, causing some British chief executives to make the argument that their smaller compensation packages are driving companies to seek listings on US stock exchanges, and that you have to pay for top talent.

However, a recent study suggests American chief executives aren’t getting better – they’re getting worse. The study, Have CEOs Changed?’, uses 4,900 assessments to study changes in the characteristics and objectives of chief executives since 2001.

Chief executives have changed over that period, and some of the changes – for example, executives have become more execution-oriented and analytical – are good.

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Other changes – they have become less creative and strategic – are not so good. The main point, however, is that the average chief executive has “lower overall ability” than predecessors, it notes. That’s the apparent paradox of the modern chief executive: lower competence but higher compensation.

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