Lucian Bebchuk and Jesse M. Fried, Pay without Performance: The Unfulfilled Promise of Executive Compensation (Cambridge, MA, and London, UK, Harvard University Press 2004) xii + 278 pp., ISBN 0-674-01665-3

Abstract

Executive compensation has been a topic of intense debate in the United States for decades. The controversy goes back to the early 1990s when, on the one hand, the high average level of CEO pay drew critical attention from the media and the public at large and, on the other hand, prominent financial economists urged companies to structure pay packages to provide managers with incentives to increase the value of the firm in the long run, regardless of the sociological or moral discussions on the amount of compensation granted. Throughout the following decade, a new executive pay pattern has emerged and become dominant: US public companies have been inclined to raise executive compensation with the specific aim of improving the sensitivity of managers' wealth to company performance.