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Is U.S. Ceo Compensation Inefficient Pay Without Performance?, Randall Thomas, John E. Core, Wayne Guay
Is U.S. Ceo Compensation Inefficient Pay Without Performance?, Randall Thomas, John E. Core, Wayne Guay
Vanderbilt Law School Faculty Publications
In this paper, we review Pay Without Performance by Professors Lucian Bebchuk and Jesse Fried. The book develops and summarizes the leading critiques of current executive compensation practices in the U.S., and offers a negative, if mainstream, assessment of the state of U.S. executive compensation: U.S. executive compensation practices are failing, and systemic reform is needed. This review summarizes the book in some detail and offers some counter-arguments. The book's thesis is that executive compensation practices are bad for shareholders (not "optimal") because they are the product of "managerial power." Managerial power arises because boards of directors at public companies …