The pay of top executives is hot topic. Are they coddled and overpaid, or do they just get the market rate? How imperfect is the market in which they compete for the top jobs? Perhaps the biggest question of all is how much to they deserve the pay they get? This last question is often answered with appeals to value creation, in particular the rise in the share price under the CEOs tenure. That's a difficult question to answer, but one that nonetheless gets asked in a new instalment of the "Closer Look" series of guides to corporate governance published by the Stanford University Graduate School of Business.
Among the questions it tries to answer are: How much value creation should be attributable to the efforts of the CEO? What percentage of this value should be fairly offered as compensation? Can the board actually perform this calculation? If not, how does it make rational decisions about pay levels?
Source document: The think piece "What is CEO Talent Worth?," by David Larcker and Brian Tayan, is an eight-page pdf.
No comments:
Post a Comment