Morning Report: Holiday Sales Not Too Bad; Detroit Pushes Farming : Planet Money Holiday retail sales came in slightly ahead of last year. Plus, two new studies show the problem with paying the boss too much.
NPR logo Morning Report: Holiday Sales Not Too Bad; Detroit Pushes Farming

Morning Report: Holiday Sales Not Too Bad; Detroit Pushes Farming

After an uncertain holiday season for struggling retailers, early sales figures coming out of the nation's malls, big-box stores and supermarkets showed improvement in several retail categories.

Total retail sales from Nov. 1 to Dec. 24 improved 3.6 percent from the same period a year earlier, according to data released Sunday by SpendingPulse, an information service of MasterCard. That figure includes traditional holiday categories such as apparel and electronics as well as outlets such as grocery stores, furniture sellers and drugstores.

The results don't necessarily point to a strong retail turnaround. The sales increases were generally modest and last year's holiday figures were so dismal that this year had very few places to go but up.

Two new studies are raising questions about the benefits of paying the C-suite more money.

The first study, led by corporate-governance expert Lucian Bebchuk of Harvard Law School, looked at more than 2,000 companies to see what share of the total compensation earned by the top five executives went to the CEO. The researchers call this number—which averages about 35 percent—the "CEO pay slice."

It turns out that the bigger the CEO's slice of the pie, the lower the company's future profitability and market valuation

In a second study, finance professor Raghavendra Rau of Purdue University and two colleagues looked at CEO pay and stock returns for roughly 1,500 companies per year from 1994 through 2006. They found that the 10 percent of firms with the highest-paid CEOs produce stock returns that lag their industry peers by more than 12 percentage points, cumulatively, over the next five years.

Companies at the top of the pay pile, Prof. Rau concluded, award their CEOs an annual average of $23 million—but leave their shareholders poorer (relative to other companies in the same industry) by an average of $2.4 billion per year. Each dollar that goes into the CEO's pocket takes $100 out of shareholders' pockets.

And down-on-its-luck Detroit appears to have a new urban renewal plan: farming.

Large gardens and small farms — usually 10 acres or less — have cropped up in thriving cities such as Berkeley, where land is tough to come by, and struggling Rust Belt communities such as Flint, Mich., which hopes to encourage green space development and residents to eat locally grown foods.

In Detroit, hundreds of backyard gardens and scores of community gardens have blossomed and helped feed students in at least 40 schools and hundreds of families.

One of the largest in the area, Hantz Farms, is unique. Although company officials declined to pinpoint how many acres they might use, they have been quoted as saying that they plan to farm up to 5,000 acres within the Motor City's limits in the coming years, raising organic lettuces, trees for biofuel and a variety of other things.