LessonThis is a lesson restated in new words. Any figure in it is an example from the source, not this desk's record.
In a small large-cap snapshot for 2021, the biggest stock award at a firm did not line up with that firm’s return over the year. On a log scale, those awards did tilt upward with the year-end price. Total pay for the highest-paid executive looked mostly flat across both price and return, aside from outliers. The lecture calls this a surface check, not a study of causes, and it does not report a significant slope it is willing to stand behind for returns.
Why it matters
The rows come from Financial Modeling Prep’s executive-compensation endpoint. You pass a ticker and your own key. A row includes the person, the title, salary, bonus, stock award, incentive plan, other pay, a total, filing dates, and a link toward an SEC page. The lecture notes the link sometimes came back as HTML and does not rely on it. The fields are enough to rank people inside one firm-year.
The idea in plain words
The helper returns every reported executive for the symbol. Duplicated names showed up. The lecture does not know why and drops duplicates on name and title before drawing a distribution. For Goldman Sachs in 2021, after that drop, five people remained. The general counsel sat near 13 million dollars total, the global treasurer near 17 million, the CFO near 20 million, the COO near 35 million, and Solomon near 40 million. Solomon was also the top stock-award name in that firm-year when they sorted on the award. A histogram of five points is a clumsy chart. It still shows the spread from under 15 million, through a little over 15 and about 20, to about 36 and almost 40.
A Tesla pull looked different at the bottom of the scale. The lecture describes a cluster near about a million dollars or a bit under, then marks around 2.5, 5, 5.5, and close to 10 million, with senior titles beyond that. The highest total in the function’s 2021 filter carried a 2023 filing date. They treat the date as late paperwork for the year they asked for, not as a 2023 pay package.
The cross-section loops over the same arbitrary large-cap list used to download prices. For each name it stores the 2021 return, computed as the last price minus the first price, divided by the first, the year-end price, the top stock award, and the top total. Stock awards are large, so they also plot the log. A log can straighten an exponential cloud. Here the return-versus-log-award cloud looked like noise. A slightly negative tilt, if you squint, is what they call a false impression. They would not write a paper on it. Winsorizing outliers or dropping the log still did not reveal a line they believed. They say a strong return relationship among large caps should have been visible even in a small set, and it was not. A Russell 3000 or S&P 500 cut is mentioned as a larger canvas, not as a result they computed.
How to use it
Filter to one year before you rank. The helper that sorts only by the award, without a year filter, can hand you a different filing. Deduplicate name and title inside the firm. Then decide which maximum you want. The top award and the top total need not be the same row, even though at Goldman Sachs one person led both in this pull.
What usually goes wrong
Treating Solomon’s nearly 40 million dollars, or the counsel’s roughly 13 million, as a market-wide law compresses one firm’s 2021 table into a rule. The figures are that table, after a duplicate drop.
Questions people ask
Did 2021 returns line up with the top stock award?
Not in this large-cap cut. The lecture describes the scatter, including the log version, as noise, and a hint of a negative slope as unconvincing. They do not report a return model they accept.
What did line up, if anything?
Year-end price and the log of the top stock award looked positively sloped. They treat that as plausible because awards are share-based dollar amounts, and they say it still needs a larger sample. Total pay looked mostly flat across price and across return.
Who was the top-paid Goldman Sachs executive in the pull?
Solomon, near 40 million dollars total, and also the top stock award in that firm-year. After dropping duplicate names, the other totals they read off were about 13, 17, 20, and 35 million for the counsel, treasurer, CFO, and COO.