Prodded by economists in the 1970s, corporate directors began adding stock options and bonuses to the already-generous salaries of CEOs with hopes of boosting their companies’ fortunes. Guided by largely unproven assumptions, this trend continues today. So what are companies getting in return for all the extra money? Not much, according to the empirical data.
In
Indispensable and Other Myths: Why the CEO Pay Experiment Failed and How to Fix It, Michael Dorff explores the consequences of this development. He shows how performance pay has not demonstrably improved corporate performance and offers studies showing that performance pay cannot improve performance on the kind of tasks companies ask of their CEOs. Moreover, CEOs of large established companies do not typically have much impact on their companies’ results. In this eye-opening exposé, Dorff argues that companies should give up on the decades-long experiment to mold compensation into a corporate governance tool and maps out a rationale for returning to the era of guaranteed salaries.
Spis treści
ACKNOWLEDGMENTS
1. INTRODUCTION
PART I. WHAT’S WRONG WITH THE DOMINANT THEORIES?
2. THE PUZZLES OF CEO COMPENSATION
3. The Corporate Personality Myth
4. MARKET MYTHOLOGY
5. Incentives Mythology
PART II. WHAT’S REALLY GOING ON?
6. Performance Pay Mythology
7. Causation Mythology
8. Predictability Mythology
PART III. HOW CAN WE BEST REFORM THE SYSTEM?
9. ALIGNMENT MYTHOLOGY
10. MOVING FORWARD
Notes
Index
O autorze
Michael Dorff has taught at UCLA School of Law, Rutgers Law School, and the Peter F. Drucker and Masatoshi Ito Graduate School of Management. He is currently Professor of Law at Southwestern Law School, where he teaches corporate law and other business law topics.
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