The Financial Crisis of 2008 is an extreme example, but one consequence was that most company and fund dividends were slashed or suspended in 2009 as the market bottomed out, and dividends were slower to
recover than stock prices.
Not exact matches
When the
stock price plummets because your company underperforms, and you subsequently feel you have to grant a lot more to remain competitive, and then your
stock price recovers, your CEO will end up with a lot more award value
than the CEO of a competitor whose firm's
stock price dropped much less, before also
recovering.
If the dividends per share were reinvested and remained constant while the
stock price never
recovered and stayed 20 % below its purchase
price, this seemingly unfortunate investment would eventually become more profitable after 18.9 years (red highlight, intersection point between 5 % dividend yield and 20 %
price decline)
than if those same dividends were reinvested and the
stock price had remained the same throughout the period.
Stock prices fell by more
than 50 percent during this downturn and have
recovered to move on to new highs.