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Understanding the CEO Pay Debate

October 23, 2014

By Susan R. Holmberg, Michael Umbrecht

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The problem of rising CEO pay is an extraordinarily complex and contested issue.

This primer on CEO pay by Susan Holmberg and Michael Umbrecht serves to unpack this complicated topic by:

  1. explaining the problems with CEO pay, including the harm it imposes on workers, businesses, and society;
  2. highlighting some of the early history of CEO pay, including a handful of the key policies that have shaped it;
  3. presenting the main theories that attempt to explain why CEO pay has risen so dramatically;
  4. addressing the fallacy of shareholder primacy and introduces the stakeholder model; and
  5. concludes by highlighting some policy recommendations that are outside of the shareholder primacy framework.

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