The Australia Council of Superannuation Investors (ACSI)
released in September 2012, a research paper (the Paper) which appears to have
been prepared for ACSI by Ownership Matters Pty Limited. The Paper was titled “CEO Pay in the Top 100
Companies: 2011”.
GRG is undertaking a detailed analysis of the material in
the Paper as on a preliminary reading it appears to be based on approaches that
are not consistent with sound statistical principles. Thus, any conclusions that appear in the
paper should be viewed with scepticism. Further,
there appears to be no attempt to explain the composition of the sample group
of companies which is based on companies in the S&P/ASX200 or how that
group of companies has changed over the 10 years for which comparative figures
are presented and analysed. It covers a
wide range of companies in terms of industries covered and sizes as measured by
either market capitalisation or revenue.
GRG research evidences that there is a strong correlation between
company size as measured by market capitalisation or revenue and the amount of
pay received by executives including CEOs.
The research appears to ignore this significant variable in the analysis.
We are also checking some of the data as it appears that
some bias or cherry-picking may be present which has contributed to the
headlines which have been picked up by the news media.
We urge readers to exercise caution in drawing conclusions
from this paper which may be being used to fuel an undisclosed agenda.
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