Myths and Realities of Executive Pay

By Ira Kay and Steven Van Putten

Book Overview

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.

• Format: Hardcover
• Language: English
• ISBN: 0521871956
• ISBN13: 9780521871952
• Release Date: August 2007
• Publisher: Cambridge University Press
• Length: 278 Pages
• Weight: 1.15 lbs.
• Dimensions: 0.8" x 6.3" x 9.2"

Customer Reviews

The restructuring of executive compensation

I wrote this book with my colleague Steve Van Putten. We were making the point that the executive compensation model in the US is working much better than the pundits would have you believe. Overall, the model has helped to create an economic juggernaut in the US, and will help us come out of the economic morass much more quickly. While not without its flaws and flawed human beings, overall the model has worked to create enormous wealth for investors in addition to creating high pay levels for the executives. Yes there will be economic volatility, but it would be much worse without executives motivated to make the difficult decisions it takes to run multi-billion dollar enterprises. We think we compile an enormous amount of evidence to create some doubt at least in the minds of the critics. The latest criticism, that the the executive pay model motivated excessive risk taking and caused the financial crisis and the Great Recession came out after our book, but it is equally mythological. The cause of the crisis was more likely the deeply flawed risk models, and not the executive pay model. Now, there may have been moral hazard on the part of traders and investment bankers, but that is not the case for the executives who owned literally billions of dollars of stock in their own companies. They did NOT have moral hazard. Another piece of collateral damage from the mythology surrounding executive compensation blamed the consultants and has caused the restructuring of our profession. As a result I have set up my own firm. Please find me at [...]. I look forward to further debate on this important topic. I gave our book 4 stars as I think I will have much more to say over the coming years. Comments are greatly appreciated.