A professor shared a unique perspective on corporations’ chief executive officers and their sharp increases in pay over the past few decades on a recent edition of the “MTSU On the Record” radio program.
Host Gina Logue’s interview with Dr. Greg Nagel, assistant professor of finance in the MTSU Department of Economics and Finance, first aired Feb. 16 on WMOT-FM (89.5 and www.wmot.org ). You can listen to their conversation here.
Nagel’s research paper, “The Overconfidence of Boards and the Increase in CEO Pay Over Time,” was published in the November/December 2014 issue of The Journal of Applied Business Research.
He asserts that executives’ pay has skyrocketed tenfold since 1980 because of corporate boards’ misplaced confidence in candidates outside their own ranks.
Nagel also learned that the use of external search firms to select candidates has increased CEOs’ bargaining power, enabling them to jump from firm to firm without needing to improve their companies to gain higher salaries.
“Executive search firms needed executives from other firms in order to make their business work,” said Nagel. “And they usually get about a third of the first year’s cash pay when they place somebody. And they get more if they place an outsider.”
To hear previous “MTSU On the Record” programs, visit the searchable “Audio Clips” archives at www.mtsunews.com.
For more information about “MTSU On the Record,” contact Logue at 615-898-5081 or WMOT-FM at 615-898-2800.