Management Turnover as Change Agent

Wednesday, April 15, 2009

Recommended Reading - Judge Posner Wrote What?, Slate

Eliot Spitzer, you remember him, just wrote a piece for Slate that examined a recent opinion by Richard Posner, a federal judge for the 7th circuit court, on executive compensation. Posner, a well known conservative judge, shocked Spitzer with regard to what he wrote about CEO executive compensation. According to Spitzer,

Posner wrote that there are growing indications that CEO compensation “is excessive because of the feeble incentives of board of directors to police compensation. … Directors are often CEOs of other companies and naturally think that CEOs should be well paid. And often they are picked by the CEO.” He then examined the conflicts inherent in the process of CEO compensation determination, concluding that “[c]ompetition … can’t be counted on to solve the problem because the same structure of incentives operates on all large corporations and similar entities, including mutual funds” [emphasis added].

Anyone interested in the issue of executive compensation should read Spitzer’s piece and check out Judge Posner’s opinion.

For more:

Freakonomics (NYT)

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