Two Goals for Executive Compensation Reform
University of Minnesota Law School
New York Law School Law Review, Vol. 52, 2007
Minnesota Legal Studies Research Paper No. 07-34
Most corporate law scholars who suggest reforming executive compensation worry about corporate governance problems that arise out of poor compensation design. Most politicians who suggest reforming executive compensation seem as or more worried about growing economic inequality. This essay briefly considers two arguments justifying legal scholars in ignoring the concern with inequality. The first argument says that we should address inequality concerns only through tax and transfer policy. This essay responds that politics may dictate sometimes trying to reduce inequality through other means as well. The second argument claims that high pay for the top executives of public corporations has played only a small role in the growth of economic inequality. This essay finds this argument much more persuasive, but suggests reasons why further empirical investigation may still show that reforming executive compensation may be a modestly important part of a broader package of reforms to reduce inequality.
Number of Pages in PDF File: 18
Keywords: executive compensation, inequality, corporate governance
JEL Classification: D30, G30, H20, K22Accepted Paper Series
Date posted: August 24, 2007
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