In The Partner‐Manager, Professor Mitchell praises their suggested executive compensation reforms and seeks to place those reforms in the larger context of the evolution of corporate management. He argues that excessive compensation is a recent phenomenon, and, as such, arguments that view it as “inevitable” must be viewed skeptically. He argues that the rise of the independent monitoring board of directors has created informational asymmetries and a power vacuum between the board and management, resulting in the rise of the “partner‐manager” whose significant equity stake created the agency problems we see today. While Mitchell accepts that the Bebchuk‐Fried reforms will help temper those incentives, he wonders whether they go to the heart of the problem, which he sees as corporate governance.
Volume 159 Issue 1 2011 Response