Liebrary: Do massive pay packages compensate CEOs for the high price for failure?

A report by the High Pay Commission stated: "It is commonly argued that executives receive high levels of remuneration to compensate them for the high-risk nature of the job…… In a survey conducted by the High Pay Commission of CEOs in the current FTSE 100 between 1 January 2009 and 31 December 2009, only six CEOs left the company, giving a turnover rate of 6%, compared with the national average employee turnover rate of 13.5%. Thus it appears that CEOs experience significantly lower rates of labour market risk than other employees. Of the CEOs that left, two went into retirement. A further three resigned voluntarily and received severance packages. In the sample only one CEO experienced involuntary redundancy in the period….This is equivalent to a rate of involuntary turnover of 1%; the national average for the same period was 0.9%."

The Economist newspaper's graphic showed that in Western Europe a mere 1% of CEOs were forced out.