By J Robert Brown Jr
“Corporate governance is one of those topics that only seems to grow in importance. Some of the importance comes from increased organization of shareholders.
The public has also become increasingly aware of these sort of issues. What was once a matter betwen managers and owners has now become an issue debate within the public at large.”
J Robert Brown in .theracetothebottom.org website, author of this article deals about the issues of executive compensation.
Compensation issues raise questions about the role of the board of directors. For public companies traded on a stock exchange, there must be at least a majority of independent directors. In fact, the largest public companies typically have a super majorityof independent directors. Yet this structure has been unable to stop a steady increase in the amount of compensation, the payment of unnecessary perqs, and, until say on pay, a not uncommon disconnect between pay and performance. Nor has the structure stopped an escalation in director compensation.
This is one of those areas where the problem is clear, the source obvious, and the solution straightforward. State law determines the obligations of the board, including those connected to the approval of executive compensation. State courts, particularly those in Delaware, have adopted standards that impose no meaningful limits on executive compensation. This phenomena is discussed at length in Returning Fairness to Executive Compensation.
The Solution ?
Read the article on Theracetothebottom.org