Congressional Hearings on CEO Pay

Editor’s Note: This post is by Steven Kaplan of the University of Chicago.

Chairman Barney Frank and the House Committee on Financial Services held hearings last week on CEO payLucian Bebchuk, Nell Minow and I were among those who testified.  My testimony is available here.  The testimony argues and presents evidence that the typical CEO is not overpaid. 

Two points are worth emphasizing.  First, the top 25 hedge fund managers earned more in 2004 than all 500 S&P 500 CEOs combined.  The same was true in 2005.  Second, when pay is measured by the amount of money CEOs actually receive (which includes exercised options), the typical CEO is highly paid for performance.

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One Comment

  1. Arthur Mboue
    Posted Monday, March 12, 2007 at 3:53 pm | Permalink

    Respected Prof Bebchuck and I disagree when it comes to his beloved activism’s cause, CEO pay communist’s style. Based on performance oriented management and corporate democracy, I believe that a good board with this fiduciary duty in mind is free to adopt any type of incentive to induce the CEO performance and maximize shareholder value. It is true that some absent minded directors, facing or not re-election, have failed to take charge of their fiduciary for fear of losing their job or constructive fraud, should not be a jugdment for the remaining directors who are tying CEO incentive and pay to performance.
    This is a call to Prof Bebchuck and all activits to this cause to consider this managerial viewpoint before to sentence all CEOs, boards of directors by consequent shareholders positive change of dividends
    Arthur Mboue, MBA, JD