CEO Pay for Performance: The Solution to Managerial Power

Abstract:     
This paper is based on the author's comments at the Columbia Symposium on Bebchuk and Fried's "Pay without Performance: The Unfulfilled Promise of Executive Compensation". The paper asks and answers four basic questions: (1) What about Bebchuk and Fried's managerial power theory does the author agree with? (2) What does the author disagree with? (3) Is a high level of CEO pay for performance compatible with the managerial power theory? and (4) Does CEO pay for performance exist?

Keywords: Executive compensation, pay without performance, Pay for performance

JEL Classifications: G30, J33, J44, K22

Working Paper Series