Prodded by economists in the 1970s, corporate directors began adding stock options and bonuses to the already-generous salaries of CEOs with hopes of boosting their companies' fortunes. Guided by largely unproven assumptions, this trend continues today. So what are companies getting in return...

The corporate governance debate has focused recently on executive compensation. While defenders of the status quo assert that CEO compensation - and corporate governance generally - is efficient, critics contend that boards have been captured by powerful CEOs who demand excessive pay...