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The University of Chicago Law School Record

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Abstract

Professor Henderson takes issue with the argument that CEOs are being paid too much. He first explores the reasons why CEO compensation has risen so much in the past twenty years (and points out that only CEOs are being examined, even though salaries for others, such as baseball players and movie stars, have risen equally as dramatically). Professor Henderson then explains the pay structure under which most CEOs get paid, arguing that CEO payment is largely consistent with the rise and fall of the market; additionally, CEO tenure is down by half. In his own research, Professor Henderson found that even when CEO payment is negotiated via arms-length transactions with sophisticated parties on both sides (such as occurs during some bankruptcies), CEOs still received high compensation, and Professor Henderson is satisfied that the laws in place help to ensure the process for payment is uncorrupted.

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