Executive Compensation
Case Summary
In 1993, Michael D. Eisner of Walt Disney fame received $203 million as executive compensation. Although this award was inflated by Eisner's exercise of stock options, many examples of compensation in millions and tens of millions raise questions on how CEOs should be paid. Critics dispute that CEOs are deserving of their pay. CEOs downsize companies or perform badly, yet continue to draw a substantial salary. Unlike low level managers, it seems there is no formula for executive compensation. The disparity between the executive pay in US and that of in other industrialized nations is great, furthering the belief that there is no rational (?) basis for compensation. Among sports and entertainment figures, there exists a feedback mechanism for pay bad performance leads to reduced earnings. Graef Crystal (c.f Boatright, 2007) argues that executives do not face pay discrimination because directors are bad negotiators [what is the linkage between the directors being......
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