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Biotech / Medical : Cell Therapeutics (CTIC) -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (212)	4/13/2004 8:03:30 PM
From: Biomaven	Respond to of 946

Here's an article (not the one I saw originally, but the only one I could find easily on the web) about the study: Investors suffer with high-flying CEOs Apr 14 08:39 AFP High-flying US chief executives who use luxury corporate jets are plunging their companies' stock into a downward tailspin, according to a study released Tuesday. Corporate jet use represents the "most costly and fastest growing, fringe benefit" enjoyed by chief executives, it found. The study 'Flights of Fancy: Corporate Jets, CEO Perquisites, and Inferior Shareholder Returns' by New York University Stern School of Business professor David Yermack found average shareholder gains underperformed market benchmarks at companies where the chief executive flies by Lear jet. Yermack's research reveals that although some of America's biggest corporate names have publicly adopted stricter corporate governance standards, the sky's the limit as far as corporate jet use is concerned. "The central result of this study is that CEO's personal use of company aircraft is associated with severe and significant under-performance of their employers' stock," Yermack wrote. "Firms' stock prices drop an average of two percent around the date of initial disclosure of corporate plane use," he said. The study found more and more CEOs relying on a Lear jet or an executive Falcon jet, suggesting more and more top Wall Street executives find the plush charms of a sleek corporate plane too tempting to resist. Private aircraft use soared in the nine years to 2002 from an annual rate of nine per cent in 1993 to over 30 per cent in 2002, according to the study which focused on 237 large companies featured in the 2002 Fortune 500 ranking of the biggest US firms. Yermack said the "inverse" relation between private jet use and a company's share price appears much larger than can be explained by the simple cost of the resources needed to keep a jet airborne. "One might conjecture the CEOs who consume excessive perks may be less likely to work hard, less protective of the company's assets, or more likely to tolerate bloated or inefficient cost structures," the study noted. "High executive perks might also occur due to weak corporate governance," it said. Such perks have come under increased scrutiny from shareholders in the wake of a flurry of corporate scandals in recent years. Former Enron Corp chairman Kenneth Lay reportedly spent time examining fabric swatches for Enron's newest corporate jet -- the company ran six corporate jets in 2001 -- as the former energy trading giant plummeted towards bankruptcy in late 2001, according to press accounts. And jurors in the recent mistrial of former Tyco International chief Dennis Kozlowski, who had been accused of looting hundreds of million dollars from Tyco's coffers, heard how Tyco executives cruised the country onboard the group's 13-strong jet fleet. Even renowned US wonder-investor and billionaire Warren Buffett has joined the club. He savoured his experience of fractional corporate jet ownership through Netjets so much he bought the company. afr.com