Runaway CEO Pay? Blame the Boards
The IUP Journal of Corporate Governance, Vol. IX, No. 3, pp. 7-27, July 2010
Posted: 10 Aug 2010
Date Written: July 2010
This study analyzes the problem of high or runaway CEO pay packages. These packages reflect substantial lapses of corporate governance by the corporate boards of directors that award the excessive pay. A combination of shareholder impotence, director self-interest and CEO domination has rendered many board directors favorably disposed — if not beholden — to overpay their corporation’s CEO at the expense of the stakeholders. The study parses the factors contributing to these breaches of board fiduciary duties, and suggests a variety of mutually compatible remedies to policymakers in the US and Europe.
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