Marissa Mayer's millions: Money well spent?

In her four years as CEO of Yahoo (YHOO), Marissa Mayer reportedly collected $162 million in compensation. She could earn an additional $57 million if she leaves the Internet company following its acquisition by telecommunications giant Verizon (VZ).

Did Yahoo shareholders get their money's worth? Mayer, a Google (GOOGL) executive who was heralded for her vision in taking the helm at Yahoo in 2012, had no more success returning the company to its former glory than the four other CEOs who preceded her. By contrast, her advocates will note that Yahoo shares, which had idled for years before she came aboard, have more than doubled under Mayer's watch.

As with most top chief executives in the U.S., most of Mayer's pay was in stock -- her base salary accounted for "only" $1 million of the $42 million she earned last year, for instance. Her struggle to revive Yahoo underlines the dirty little secret of executive comp: Showering CEOs with equity-based incentives doesn't work.

Corporate boards around the country continue to dole out huge numbers of restricted stock units, stock options and other stock awards. Equity incentive awards account for at least 70 percent of total CEO pay in the U.S., according to MSCI. In 2015, more than 8 of 10 S&P 500 companies offered performance-based equity to their CEOs, up from 62.5 percent in 2011.

The mantra: Performance-based pay is the best way to align a fearless leader's financial interests with that of investors.


It rarely works out that way. In an an analysis of how 429 U.S. companies performed over a 10-year period, advisory firm MSCI finds that companies that paid their CEOs more in stock-based incentives generated lower returns for investors than did companies that paid less.

"[W]e found little evidence to show a link between the large proportion of pay that such awards represent and long-term company stock performance," the authors write in the report.

Even adjusting for company size and the sector they were in, businesses with total lower CEO pay did better over the long term, the firm said.

The median pay for chief executives of S&P 500 companies in 2015 was $10.4 million, up 17 percent from 2011, according to Equilar.

Such findings will not exactly come as a shock to those who have watched top execs' pay shoot into the stratosphere over the last 30 years -- often with little to show for investors. CEO comp since 1978 has soared 941 percent, while the S&P 500 over that time is up 543 percent, according to the Economic Policy Institute (see chart at bottom).

The upshot: Many of America's biggest companies aren't paying for performance -- they're paying for a pulse.

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    Alain Sherter covers business and economic affairs for