CEO pay at the crossroads of Wall Street and Main: Toward the strategic design of executive compensation.

1) My understanding of the paper:

Executive compensation has generated controversy related between the executive pay and the firm performance.

The lack of relationship has led to calls from for reform from various organizations (stakeholders, shareholders, etc.)

Linking compensation to objectives and performance measures emphasises short term profitability at the expense of the long term viability.

The base of evaluation market v/s accounting might be different in the way of evaluating performance strategically.

Combined ownership and control the incentive is not a threat because the manager is at the same time the owner. The principle of profit maximization is assumed to be sufficient to motivate and guide managers.

The separation of ownership and control are resumed in that the professional managers hold a small or in some cases none of the firm’s equity.

Pay for performance is a double edged sword, it has been found that CEO wealth changes $3.25 for every ...