Equity-Flavored Executive Compensation

Abstract

Criticism of management compensation at U.S. public companies has become increasingly shrill, including an assault on perceived and undeserved windfalls from stock options. The article reviews the critical importance to the U.S. economy of stock flavored rewards for the benefit of key managers criticizes clumsy regulations by attention hungry politicians and suggests a program for changing the structure so as to align management and shareholder interests more precisely, without surrendering the vital benefits of the historically validated reward system.