Companies do better when they tie outgoing CEOs to keeping stock | Financial Times

Companies that tie senior executives to keeping their shares when their job ends perform better than those that let bosses sell stock when they leave, according to research by Schroders, the £421bn London fund house.Corporate governance activists want chief executives to be required to hold shares in the companies they run for a set period after they leave. They see this as a way to align bosses’ interests with those of shareholders.The Schroders analysis strengthens this argument by highlighting the benefit of tying executive pay to shareholdings.The study assessed the effect of various governance factors on total shareholder return and average downside risk for nearly 1,500 companies over the past five years.It found that CEO shareholding requirements helped companies to achieve improved upside or reduced downside in their financial performance.

Source: Companies do better when they tie outgoing CEOs to keeping stock | Financial Times

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