The National Center for Policy Analysis released a press release today on a paper released by executive compensation consultant Watson Wyatt Worldwide. In case you didn't know, executive compensation consultants are basically paid large amounts of money to justify paying CEOs and other managers even larger amounts of money. Here is the bulk of the release:

The current executive pay system -- the "pay-for-performance" model -- is working effectively.  In other words, say Ira Kay and Steven Van Putten of executive compensation consultants Watson Wyatt Worldwide, pay levels track corporate performance. 

Their study, which analyzed the relationship between the total return to shareholders generated by companies and the related stock option compensation for executives in the largest 1,088 companies in the United States in 2006, found that executives in companies that performed well were rewarded for that better performance

Other findings:

• While executive compensation packages of 10 seem exorbitant, CEO pay is a very small part of the overall cost structure of companies.
• Total CEO pay in 2004 was just 0.09 percent of sales, 0.06 percent of market capitalization and 1.3 percent of net income of companies.
• In 2006, CEOs in high-earning companies earned far more realizable pay -- the actual cash bonus paid the in-the-money value of stock options and the real value of restricted stock, plus the payout from performance plans -- than CEOs at companies with low earnings; the former also earned 3 times as much in realizable long-term incentives (LTI).