Too much is not enough : incentives in executive compensation /

Executive pay has been rising significantly, even after adjusting for inflation, and was the focus of hot debate during the recent economic crisis. Kolb (finance, Loyola Univ. Chicago) provides an understandable treatment of the strengths and weaknesses of executive compensation plans. Incentives that dominate executive compensation motivate risky behavior in chief executive officers and sometimes work against a company's interests. Various incentives discussed by Kolb include higher salaries, annual bonuses, restricted stock, executive stock option awards, pensions, perquisites, postretirement consulting contracts, and generous executive loans. He describes how such incentives may result in inappropriate mergers, a focus on short-term rather than long-term decision making, efforts to tilt firms away from paying dividends and toward buying their own shares, and executive crimes. Kolb reports that new legislation, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act, which helps refine corporate governance, and the Sarbanes-Oxley Act, which increases financial reporting requirements, are key to reforming undesirable executive behavior. This work contains numerous charts and graphs and extensive footnotes at the end of the book. Lucian Bebchuk and Jesse Fried's Pay without Performance: The Unfulfilled Promise of Executive Compensation (CH, Apr'05, 42-4735) provides similar readable commentary concerning executive compensation. Summing Up: Recommended. Business collections, upper-division undergraduate through professional. G. E. Kaupins Boise State University