While the Great Depression, the rise of unions and the bursting of the Internet bubble incited public outrage and congressional action on executive pay, big paychecks quickly became the norm again.
"The most powerful investors have been willing to pay dearly for (executive leadership) even when performance is poor," the Review writes. "Unless the current crisis leads to a union revival or a dramatic closing of borders, that attitude is likely to continue."
Meanwhile, the American points out that the debate over executive compensation too often lacks historical perspective. Economists Carola Frydman of MIT's SloanSchool of Management and Raven E. Saks of the Federal Reserve analyzed data on CEO pay from 1936 to 2005, and concluded that executive compensation was remarkably flat from the end of World War II to the mid-1970s, a time during which firms were growing rapidly. Since the 1980s, however, executive pay and firms expanded at almost the same rate, discovered the authors, who published their findings in a National Bureau of Economic Research working paper titled "Executive Compensation: A New View from a Long-Term Perspective 1936-2005."
The authors also estimate that for most of the 20th century, a CEO could expect a 30 percent to 60 percent increase in firm-related wealth if he or she had boosted firm performance from the 50th to the 70th percentile rate of return.
