Executive Pay Research Paper

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There has been a public debate over executive compensation for decades. However, concerns over executive compensation have increased in recent years due to the financial crisis of 2007-2008 and rising income inequality. Economists mostly agree that executive pay arrangements contributed to the excessive risk-taking of companies during the years leading up to the financial crisis. Many companies paid their executives excessive bonuses and compensation, which rewarded, and even encouraged, risky behavior.
Additionally, executive compensation has contributed to rising income inequality in the United States. For decades, executive compensation has been vastly rising, and has been doing so at a faster rate than the pay of typical U.S. workers. Accordingly, the gap between the pay of chief executive officers (CEOs) and the pay of the average worker has also been widening, and CEO pay remains high relative to the pay of typical workers and high-wage earners. As the CEO-to-worker pay gap has increased over the last few decades in the United States, …show more content…
Among these provisions is Section 953(b), which directs the U.S. Securities and Exchange Commission (SEC) to amend existing disclosure rules to require certain publicly traded companies to disclose in a wide range of their SEC filings: (1) the median of the annual total compensation of all employees, except for the CEO; (2) the annual total compensation of the CEO; and (3) the ratio of the these two numbers. In 2015, the SEC, complying with its Congressional mandate, finalized the Pay Ratio Disclosure Rule. Therefore, for the first time, public companies will be required to disclose their CEO-to-worker pay ratios (Pay Ratio) in their future SEC

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Fried. “Executive Compensation as an Agency Problem.” Journal of Economic Perspectives, vol. 17, no. 3, Summer 2003, pp. 71–92, doi: 10.1257/089533003769204362. This article from an academic journal discusses how executive compensation is derived and evaluates the risk that CEOs might not make decisions that are in the best interest of the stockholders. One author of this article, Lucian Arye Bebchuk, is a professor of law, economics, and finance at Harvard Law School. He is also a research associate…

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