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Goldilocks in the corner office

Author

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  • Ronald A. Wirtz

Abstract

The proper level of CEO compensation is more complicated than some normative sense of what the public considers fair. But with CEO pay regularly reaching eight, even nine figures, could current levels possibly be efficient? Economists can make a good theoretical case that CEO pay is inefficient, but they've had trouble pinpointing the systematic rent (pay in excess of fair market value) being extracted by CEOs. While it might not lower CEO pay, better corporate governance is likely the key to ensuring that it is tied tightly to firm performance.

Suggested Citation

  • Ronald A. Wirtz, 2006. "Goldilocks in the corner office," The Region, Federal Reserve Bank of Minneapolis, vol. 20(Dec), pages 22-25,32-35.
    • Handle: RePEc:fip:fedmrr:y:2006:i:dec:p:22-2532-35:n:v.20,no.4
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