The latest reporting, opinion and research on executive compensation. We don’t necessarily agree with it all, but we provide it here for consideration.

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Week of
July 11, 2016

Quick Picks

Why Do Shareholders Condone Seemingly "Excessive" Executive Pay? | University of Michigan | July 1, 2016

A recent study conducted by the University of Michigan explores the power of large mutual fund companies in exerting influence over executive compensation at companies they invest in. The author proposes that these mutual funds are actually following logical economic incentives when they condone large compensation packages. Because mutual funds are shareholders in multiple rival companies they condone compensation that rewards industry profitability, a phenomena the study cites as prevalent in the market. Read more

Stop Making CEO Pay a Political Issue | Harvard Business Review (subscription required) | July 18, 2016

Executive compensation has become an increasingly politicized topic recently, according to Alex Edmans. Citing past unintended consequences of executive compensation regulation, Edmans advocates for leaving compensation decisions to major shareholders rather than politicians or employees. He argues that while regulation is generally one-size-fits-all, shareholders, who ultimately bear the costs of CEO compensation, have the incentive to find the optimal pay package for each company. Read more

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