Executive Compensation and Shareholder Value

Executive Compensation and Shareholder Value

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Executive compensation has gained widespread public attention in recent years, with the pay of top U.S. executives reaching unprecedented levels compared either with past levels, with the remuneration of top executives in other countries, or with the wages and salaries of typical employees. The extraordinary levels of executive compensation have been achieved at a time when U.S. public companies have realized substantial gains in stock market value. Many have cited this as evidence that U.S. executive compensation works well, rewarding managers who make difficult decisions that lead to higher shareholder values, while others have argued that the overly generous salaries and benefits bear little relation to company performance. Recent conceptual and empirical research permits for the first time a truly rigorous debate on these and related issues, which is the subject of this volume.take actions and make decisions that are at odds with shareholder value maximization. ... Agency costs are large and pervasive. ... Boards typically do not know what ex ante actions maximize firm value (which is one of the reasons they hired a CEO) ... During the past 15 years, boards have attempted to mitigate this problem by making CEOs into effective owners by granting them stock options on a yearlyanbsp;...

Title:Executive Compensation and Shareholder Value
Author:Jennifer Carpenter, D. Yermack
Publisher:Springer Science & Business Media - 2013-04-17


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