2.41 CEO compensation and stock market performance

An academic study concludes, “The evidence indicates that the correlation between the compensation of corporate CEOs and the performance of their company’s stock is close to zero.” A business magazine reports this as “A new study shows that companies that pay their CEOs highly tend to perform poorly in the stock market, and vice versa.” Explain why the magazine’s report is wrong. Write a statement in plain language (don’t use the word “correlation”) to explain the study’s conclusion.