Companies that say they try to maximize value for shareholders pay CEOs more, regardless of performance, according to a new study.

The study, conducted by Takjin Shin, a professor of labour and employment relations at the University of Illinois, looked at compensation data for 290 CEOs at large U.S. companies over 11 years.

"You would expect that if a company has espoused the principle of shareholder-value maximization" Shin said, "then executive compensation should be less."

But the study found the opposite is true.

"All these sorts of corporate governance mechanisms intended to curb excessive pay and constrain CEO influence over the pay process is actually working in reverse."

"Not only has it failed to work, it provides chief executives with further justification for greater pay."

Shin chalks this up to politically savvy CEOs being able to "game the system".

Say on pay

Shin examined the case of the Simon Property Group, which operates hundreds of malls in the U.S. and internationally.

Its CEO, David Simon, was paid $137 million dollars last year. The vast majority — $131 million — was a stock package put in place to ensure Simon stayed at the company for seven years.

It made Simon the highest paid CEO in the U.S.

But appearances suggest Simon’s departure from the company that bears his name is unlikely. He has been an executive at the company for 20 years, and is the son of one of the company’s co-founders.

Shareholders revolted — by voting 73 per cent against the pay package during a ‘say on pay’ vote. But those sort of votes aren't binding, so Simon’s pay package remained intact.

One prominent shareholder — a Louisiana public pension fund — filed a lawsuit against the company, saying the retention bonus is far too high, and isn’t conditional of Simon’s performance as CEO.

Shift in priorities

According to Shin, this is part of a fundamental shift in the business world from long-term thinking to short-term thinking.

Before what Shin calls the "shareholder value revolution" of the 1980s, "most business decisions were based on sound business logic in terms of efficiency and operations."

The study says after that, the focus turned to maximizing shareholder value, and as a result CEO pay became tied to that.

"Now everyone is shifted toward profits — profits strictly in terms of shareholder value," he said.