[T]here is no more complete and
carefully considered work addressing the weaknesses in the current executive pay process.
--Joseph Bachelder, Bachelder & Co., National Law
Dec. 13, 2004
In a true tour de force, Bebchuk
and Fried march relentlessly through one form of executive compensation after another, advancing
a consistent story of how management influence taints and distorts the compensation process.
--Stephen Bainbridge, Tech Central Station, February 2, 2005
Bebchuk and Fried have
written a provocative and important book on executive compensation.
--John Biggs, former CEO of TIAA-CREF
Like Thomas Paine's Common Sense in an earlier era,
Pay Without Performance is a terse manifesto for our age of manager's capitalism--a
crystal clear and dispassionate, but ultimately devastating, analysis of how our deeply flawed
system of corporate governance has led to grossly excessive executive compensation. This is a
book that must be read, not only by any citizen who cares about sound corporate governance,
but by any citizen who cares about our society--the best book that I've ever read on the
--John C. Bogle, Founder, The Vanguard Group
Bebchuk and Fried, careful
scholars of the first rank, develop a compelling critique of the market for managerial services.
Pay is decoupled from performance. Executive compensation is neither fair nor efficient,
operating as much on stealth as on open negotiation. Their evidence, their conclusions, and
their recommendations cannot be ignored: they should be studied by boards, courts, the
SEC-and anyone who wants contemporary corporate governance to work.
--John Coffee, Jr., Columbia Law School
According to [the arm's length
bargaining] model, a potential CEO and the company in search of an executive will strike a
rational bargain . . . Bebchuk and Fried assemble an array of evidence to suggest that cozy
deals between CEOs and their boards get in the way of this admirable rationality . . . Pay
without Performance is ably written, thoroughly researched and intelligently argued throughout.
--Tyler Cowen, Wall Street Journal, December 23, 2004
Bebchuk and Fried have written
a superb book. It will benefit academics and non-academics alike, and shed
much light on the great executive pay debate.
--Graef Crystal, author of In Search of Excess
..[B]rave and correct ... well-written, well-researched ... and strongly grounded in empirical and historial evidence.
--William Dugger, Journal of Economic Issues
If one has time to read only a single book about corporate governance in US publicly traded companies, this is the book to read..
--James Fanto, International Company and Commercial Law Review
Pay without Performance... fulfills its promise of providing a thorough description as well as the foundations of a normative framework of the problem of top executive compensation.
--Alexander Gümbel, Oxford Journal of Legal Studies
..[A]n important contribution to the continuing discussion about corporate governance. it will repay a careful reading, and it is likley to acheieve the influence it deserves to have.
--Robert Kennedy, Ethics and Economics
The most important change in
corporate structure in the United States has been the shift of authority from stockholders
and their directors to management. From management authority comes control of management
compensation. That this should be generous, even lavish, and with no necessary relation to
performance, is the reality of modern economic life. This literate and learned book is for
all who wish to learn the facts and consequences.
--John Kenneth Galbraith, author of The New Industrial
State, The Great Crash, and, most recently, The Economics of Innocent
Bebchuk and Fried argue persuasively that executives of large companies have immense power, and that they use this power to pay themselves large amounts that are insufficiently related to performance. Nobody who reads this book will feel quite the same about Corporate America again.
--Oliver Hart, Harvard University, and author of Firms, Contracts, and Financial Structure
“[A] timely, thoughtful
and provocative book that is bound to become influential”.
--Bengt Holmstrom, MIT Dept. of Economics,
Journal of Corporation Law
A profound and insightful analysis of the crisis in executive compensation.
--Ira Kay, National Director of Compensation Consulting,
Defenders of the status quo
say that such bloated pay provides managers ... with incentives crucial to high performance.
Those defenders have not yet read Lucian Bebchuk and Jesse Fried's Pay Without Performance.
The authors marshal a formidable arsenal of facts to pick apart the incentives argument,
exposing myriad ways in which CEOs have decoupled pay from performance and hidden that
fact from investors with the aid of supine corporate directors. The lucidly argued treatise
frames the issue not in ethical terms but as a problem of efficiency.
--Unmesh Kehr, Time Magazine, November
Because I read SEC filings every
day for my blog, I know just how spot-on Lucian Bebchuk's and Jesse Fried's Pay without
Performance really is.
--Michelle Leder, author of "Financial Fine Print", Across the Board, May/June 2005.
Lucian Bebchuk and Jesse Fried have
brought to light one of the most important issues facing our society today. I agree
enthusiastically and almost completely with their analysis of the problem.
--Arthur Levitt, Jr., former chair of the SEC
Lucian Bebchuk and Jesse Fried
identify many of the causes of the current compensation crisis.
--Jay Lorsch, Harvard Business School, Across the Board,
I cannot recommend this book highly enough.
--Tyler Mathisen, CNBC
[A]n important book that should help to get the academic profession thinking in a new direction. The supporters of the conventional model of compensation clearly have a case to answer, and this book makes it plain what the challenges to developing a better understanding of executive compensation are.
-- Ernst Maug, University of Mannheim, Journal of Institutional and Theoretical Economics.
This book scares the hell out of
you because it gives you the best insight into how super-CEOs exploited the system of executive
compensation in the US.
--William McDonough, Chairman of the US Public Company
Accounting Oversight Board, Financial Times, December 23, 2004
[T]he best book
published in 2004 in the field of corporate governance . . . It should be required reading
for every fund fiduciary, SEC board and staff, as well as all members of Congress.
Shareholders should read while sitting down.
--James McRitchie, Publisher, Corporate Governance
Book of the year . . . This outstanding book makes a compelling case that "flawed compensation arrangements have been widespread, persistent, and systemic" . . . Clear writing, well-chosen examples, solid research, and exceptionally astute analysis make this an indispensable resource for investors, executives, directors, compensation consultants, and human resources specialists.
--Nell Minow, Chairman, The Corporate Library
This book has important messages about where that balance should lie, not just with regard to executive compensation but go governance in general.
--Peter Montagnon, Management Today, February 7, 2005
Impressive in scholarship, impeccable in timing, and accessible in style, this book deserves the attention of academics, policy makers and long-suffering investors.
--Christopher Nicholls, Cambridge Law Journal
complex . . . Bebchuk and Fried's compelling book clearly shifts the burden of proof to the
opponents of corporate governance reform. Well worth reading!
--Stephen O'Bryne, President, Shareholder Value Advisors, Directors & Boards
For anyone looking for a guide to the debate over American top pay, this book will be indispensable. It is clear, well-argued, fully researched and deeply felt.
--Michael Skapinkler, Financial Times
Bebchuk and Fried present
a powerful challenge to financial economists' view that compensation arrangements
are designed by boards seeking to increase shareholder value. They offer a compelling
account of how managers' influence has distorted executive pay. By showing how
boards have failed to guard shareholder interests, Bebchuk and Fried raise fundamental
questions concerning our corporate governance system and lay the ground for their
proposed reforms. Their work will shape debates on executive compensation and corporate
governance for years to come.
--Joseph Stiglitz, Nobel Laureate in Economics,
and author of The Roaring Nineties
as when others have attacked strong beliefs and a well-developed canon
in the past with new and strong evidence..., the guardians remain convinced
otherwise. But the strong evidence eventually prevails, and to me, the evidence
that Bebchuk and Fried are right is more than convincing."
-- Henry Tosi, Administrative Science Quarterly
Lucian Bebchuk and Jesse Fried offer
a devastating critique of the way public companies pay their top executives. Relying on data
rather than rhetoric, Fried and Bebchuk describe a diseased system in which executives wield
enormous influence over their pay .... [T]hose looking for a substantive deconstruction of the
system -- and a few ideas to fix it -- could hardly do better.".
--Ben White, The Washington Post, December
[T]he most comprehensive, closely
argued, and devastating . . . critique on executive compensation. . . . will be -- at least
should be -- studied by those who believe that our corporate system, which currently looks
out of control, still has a future. What's remarkable about Pay without performance, and
which may give it more impact than other books on executive pay, is that it is not an angry
creed but, rather, a studied, scholarly analysis whose understated language gives it a
cumulative effect that is overpowering.
--Across the Board, March/April 2005
Lucian Bebchuk of Harvard and Jesse
Fried of Berkeley set out to identify the failure of corporate governance that allows chief
executives' compensation to carry on rising with little relation to performance. They point the
finger firmly at board directors.
Lucian Bebchuk and Jesse Fried in their
in their devastating new critique of U.S. corporate remuneration and governance...pick apart
the nasty tangle of conflicts that ensure CEOs' sway over their own pay.
--Global Proxy Watch, December 3, 2004