The U.S. stock market is overpriced. A case can certainly be made that it will keep going higher from here, but by historical standards it is already above average per measures of good value. One way to evaluate which companies might do well following an inevitable correction or bear market is by looking at chief executive officer (CEO) pay. Corporate top brass are receiving higher pay packages than ever before. Such large levels of compensation are often at the expense of both shareholders and employees. Studies have in fact shown that companies with higher CEO pay tend to do worse in terms of both profitability and share performance than those with less generous chief executive compensation.
For example, per "Lower Paid CEOs Generate Bigger Returns Than High Flyers: Study," by David Lieberman in deadline.com, July 25, 2016, in a 10-year study reported on in 2016, it was found that among 429 large-cap companies, the CEOs receiving the lowest 20% of compensation provided their shareholders with greater returns than those receiving the highest 20%. The differences were significant, up to 39%, in favor of positive results for lower paid CEO companies. There are other indications as well that, overall, lower pay for the CEOs of publicly traded companies enhances shareholder returns. Of course, the rationale for ever increasing CEO pay is the opposite. Oddly enough, few boards of directors limit their CEOs' pay, possibly suggesting the directors do not have their shareholders' interests in mind but are in league with the CEOs. The latter, of course, provide their salaries.