Monday, November 21, 2011

Executive Pay: The High Cost of Market Failure

Read more: http://www.theage.com.au/business/executive-pay-the-high-cost-of-market-failure-20111010-1lh2o.html#ixzz1eNUbhIk6

This article links Occupy Wall Street to the extensive amounts of compensation being given to high level executives. The argument of the article is that executive pay should fall with stock prices, meaning that they should be linked with the performance of the company. The article also discusses the mandatory public disclosure of top salaries in 1990 and its affect on the increase of executive salaries. In addition, it also discusses the idea the pay should be correlated with risk (as talked about in class), and since CEOs are in fact not the owners of their respective companies, their decreased risk should result in decreased pay.

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