Steven N. Kaplan on the State of US Corporate Boards and Governance: What is Right and Wrong?

Geoffrey Owen, Tom Kirchmaier () and Jeremy Grant
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Geoffrey Owen: Interdisciplinary Institute of Management, London School of Economics and Political Science
Jeremy Grant: Graduate Institute of International Studies

Chapter 5 in Corporate Governance in the US and Europe, 2006, pp 37-41 from Palgrave Macmillan

Abstract: Abstract Since 1980, the structure and overall performance of US corporate boards appear to have improved in terms of setting executive compensation, monitoring CEOs and independence of top management. The large increase in the equity component of executive compensation has been an important part of this shift as it has significantly increased senior managers’ focus on the creation of shareholder value. US boards, however, have performed less well in a number of key areas, particularly monitoring accounting manipulation and effectively valuing the options granted to senior executives. Recent reforms have had a positive effect on these issues (although they have imposed a substantial increase in compliance costs, particularly in the short term). Boards can still go further in improving executive compensation by restricting the liquidity of options grants and expensing all stock options.

Keywords: Corporate Governance; Audit Committee; Private Equity; Stock Option; Executive Compensation (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-51245-0_5

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DOI: 10.1057/9780230512450_5

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