CEOs are sometimes rewarded for taking excessive risks – a
practice that helped fuel the recent recession but could be altered if
companies are more strategic in how they compensate their chief executives, a
Michigan State University scholar argues in a new study.
Instead of issuing stock and stock options in predetermined
quantities, boards of directors should vary a CEO’s equity-based compensation
through a plan that fosters the amount of risk-taking the firm desires, said
Robert Wiseman, chairperson and professor in MSU’s Department of Management.