Performance-based pay plans for corporate executives are becoming more popular as stockholder activists and board members demand more accountability. Gopalan, tells Nicklaus,”that’s a big step forward from the days when insider-dominated boards often handed out discretionary bonuses based on little more than a desire to keep the big boss happy.” Gopalan also notes that the executive labor market has become more competitive.
Link to article: “It was a good year for St. Louis CEOs, but not for all of them”
In another column, Nicklaus predicts executive pay could become a hot political issue in 2018. A new rule under the Dodd-Frank Act goes into effect next year that requires “companies to compare their chief executive’s pay to that of an average worker.”
Professor Gopalan says the ratio doesn’t have much merit. “It will give political fodder to politicians who don’t like corporations, but I don’t think it’s an economically meaningful number to focus on,” he says.
Link to article: “Pay ratio will be hot political issue next year”