Examining if There is a Relationship Between CEO Compensation and the Stock Price and Net Income of Publically Traded Corporations in the State of Wisconsin, USA

Calculating the economic value that a CEOcontributes to the worth of a corporation is seemingly a mootpoint. The standard method of calculation is the use of financialratios, the firm’s stock price and to what degree were the overallobjectives of the enterprise accomplished. The purpose of thisquantitative research project was to investigate if any significantrelationship existed between the annual salaries of the CEOs of48 publically traded firms in the State of Wisconsin, USA andincreases/decreases in the price of their corporations’ stock priceand net revenue. The author of this study selected the State ofWisconsin as the basis for the study due to the number ofFortune 1000 firms (25 the 16th highest in the United States) andFortune 500 companies (10). Some prominent firms includeFiserv, Harley-Davidson, Johnson Controls, Kohl’s, Manpower,Oshkosh Corporation and Rockwell Automation. The outcomesof this research revealed that there was no statistically significantrelationship between increases/decreases in the price ofWisconsin’s publically traded corporations’ stock price and netrevenue in 2008. However, in 2010 while there was no statisticallysignificant correlation between the compensation of corporateexecutives of 48 publically traded firms in Wisconsin andincreases/decreases in the price of their corporations’ stock pricethere was a statistically significant correlation between thecompensation of these executives and the net incomes of theirfirms. Finally, three Wisconsin CEOs were ranked among the top250 highest CEO/Pay ratios in America