Myths and Realities of Executive Pay

This book answers the question 'Are CEOs overpaid?'

Ira Kay (Author), Steven Van Putten (Author)

9780521871952, Cambridge University Press

Hardback, published 27 August 2007

278 pages, 68 tables
23.6 x 16 x 2.5 cm, 0.51 kg

"Written by one of the country's leading compensation consultants, this book is a significant addition to the debate on executive pay. Ira Kay's defense of current pay practices should be read by anyone seeking to assess whether these practices are well designed to serve the interests of investors."
Lucian Bebchuk, co-author of Pay without Performance: The Unfulfilled Promise of Executive Compensation

Popular perceptions of executive compensation in the United States are now part of a full-blown mythology fueled by critics who have little direct experience with the inner workings of corporations, their boards, and the executive teams who ultimately shoulder the responsibility for business success or failure. This book documents the realities of executive compensation by investigating the extent to which the pay for performance model governs executive pay levels. It also assesses the relative success of this model in creating value for shareholders and robust job growth for U.S. workers and provides detailed, real-world guidance for designing and executing effective executive compensation plans. Based on extensive empirical research and decades of direct experience in the field, Myths and Realities of Executive Pay settles the debate about executive compensation and the role it plays in the broader U.S. economy.

Prologue: the compensation committee meets
Introduction: the battle over executive compensation
1. The myths and realities of pay for performance
2. The myth of managerial power
3. External pressures: the new context for executive compensation
4. End of an era: the decline of the stock option
5. The future of long-term incentives
6. Executive stock ownership: the solution to the executive compensation crisis
7. Director compensation in the new environment
8. The compensation committee: creating a balance between shareholders and executives
9. Aligning all employee pay to improve corporate performance
10. International executive pay comparisons
Conclusion: the future of executive compensation
Epilogue: back in the boardroom
Appendix A. Legal and regulatory requirement for executive compensation plans
Appendix B. Summary of the regulatory and institutional mandates and recommendations
Appendix C. Academic articles on pay for performance and the executive labor market.

Subject Areas: Corporate governance [KJR], Corporate finance [KFFH], Financial reporting, financial statements [KFCR], Financial accounting [KFCF], Economic systems & structures [KCS], Economics of industrial organisation [KCD]