California Management Review

Abstract

Executive compensation in the United States has gotten out of control. There is no longer a level-playing field when a very well informed seller (the CEO) is combined with the uninformed buyers (the shareholders and the compensation committee of the board). In an excerpt from his new book, In Search of Excess: The Overcompensation of American Executives, the author describes the upward spiral of executive compensation, the deceptions involved in determining and reporting compensation packages, and the rationalizations used to justify them. He provides a list of the culprits responsible for creating the problem and allowing it to continue--a list that includes compensation consultants, board compensation committees, the Financial Accounting Standards Board, and the Securities and Exchange Commission.

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