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To: Chuzzlewit who wrote (99011)	2/14/1999 11:55:00 AM
From: Mick Mørmøny	Read Replies (1) \| Respond to of 176387

Paul, here's another tray of the feline's preferred meal -- voles. Will the Socratic cat, who questions everything, care to comment on the bolded text, at his leisure, please? I'll be back to remove the tray. Beni2 Mick Mormony ---------------------------------------------- Should the Boss Own More Stock? Investors trying to divine a stock's future performance ought to look at how much of it is held by the company's chief executive: the more the better, according to a study by Watson Wyatt Worldwide, a consulting firm based in Bethesda, Md. In the study, Watson Wyatt examined 261 large-capitalization companies that had the same chief executive in 1993 and 1997, dividing them into high and low performers, based on five-year total returns through 1997. Then it examined the amount of company stock held by the boss in 1993. Companies that performed above the median -- returning an average of 28 percent annually to shareholders over the five years -- were headed by chief executives who held an average $8.1 million in company stock in 1993. The chiefs of companies that performed below the median -- returning an average of 13 percent annually -- held just $4.5 million in company stock. Is this evidence that stock is an effective performance incentive? Not necessarily. It's possible that chiefs of companies that are likely to underperform simply shun stock compensation. But Ira T. Kay, global practice director of executive compensation consulting at Watson Wyatt, said he believes that encouraging the boss to own stock is good for performance, noting that the pattern holds even in lackluster, low growth industries. "You've got to come up with creative ways to get CEOs to buy more stock," he said. Why not just pay the chief executives more? In part because such compensation -- defined as salary, bonus, other cash compensation and profit from exercised options -- seemed to have a somewhat less direct effect on shareholder returns. Watson Wyatt divided a somewhat larger sample of 451 companies based on the chief executives' 1997 compensation. Companies above the median paid their top executives an average of $5.7 million and gave shareholders a 26 percent one-year return. Those below the median paid an average of of $1.3 million and returned 18 percent. Richard Teitelbaum