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Pay without Performance: The Unfulfilled Promise of Executive Compensation
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Binding: Paperback
Dewey Decimal Number: 331.2816584
EAN: 9780674022287
ISBN: 0674022289
Label: Harvard University Press
Manufacturer: Harvard University Press
Number Of Items: 1
Number Of Pages: 304
Publication Date: September 30, 2006
Publisher: Harvard University Press
Studio: Harvard University Press
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Editorial Review: The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.
(20041128)
Customer Reviews
Average Rating: 
Rating:  - Everybody Knows the Game is Fixed: The Poor Stay Poor, the Rich Get Rich...
So sang Leonard Cohen in 1988's "Everybody Knows".
The game of executive compensation, this fascinating study of CEO pay demonstrates, is definitely fixed. In theory, executives are hired by a company's impartial board of directors, who negotiate with them at "arm's lengths". If the CEO of large public owned companies receive huge compensation - and they do - that's because they are worth it. Much of the compensation is tied to the firm and the CEO's performance. Thus the CEO has ... Read More
Rating:  - Author an academic and not experienced in actual day to day compensation matters
Jesse Fried is a corporate compensation grandstander who seems to show up at every scandal (recently the backdating scandal). Unfortunately it is obvious he has no "real world" management experience!
On Mr. Frieds allegation that stock option expenses are "hidden" by CEOs, corporate types in order to increase their bonus targets:
- CEO compensation (bonus targets etc) are almost NEVER based on non cash expenses, such as stock options expenses. Bonus targets are typically cash flow ... Read More
Rating:  - This Fascinating Read Will Leave You Thinking ...
Other reviewers have made many excellent points. I'll try to avoid duplicating their comments here...
- This book is written by two law school professors. They carefully and precisely make their case. Even as they make their points, they consider possible counter-arguments, and then cite further evidence to answer these objections. They clearly and methodically make their case.
- They start from a somewhat unique set of premises.
--> Whereas many critiques of executive ... Read More
Rating: - Fantastic Resource on Corporate Culture Run Amok
Superb exposé on the appalling lack of ethical fortitude amongst our country's business elite--namely the chief executives, their officers, and sadly those given the responsibility for representing the shareholders' interests, the directors. The adage "no one looks after your money like you do" is well-remembered by the reader of "Pay without Performance."
Primarily due to a phenomenon know as "interlocking" executives cross-pollinate their respective boards with a surprisingly shallow gene ... Read More
Rating: - Excellent. The authors deliver a strong performance.
This is an excellent book. The authors have done extensive research from both a legal and economic standpoint to support their hypothesis that companies with better Board governance, more accountable CEOs, better structured CEO compensation packages perform much better than the others. They show better operating performance resulting in superior shareholder value creation over the long term.
Their diagnostic of what ales executive compensations are so well grounded they have become common knowledge ... Read More
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