Excerpt
Excerpt
Monetary Liability for Breach of the Duty of Care? Holger Spamann, September 2015, Paper, "This paper clarifies why optimal corporate governance generally excludes monetary liability for breach of directors’ and managers’ fiduciary duty of care. In principle, payments predicated on judicial evaluations of directors’ and managers’ business decisions could usefully supplement payments predicated on stock prices or accounting figures in the provision of performance incentives. In particular, the optimally adjusted combination of standard performance pay and tailored partial liability could impose less risk on directors and managers, and provide better risk-taking incentives, than standard performance pay alone. This paper shows this in a formal model summarizing well-known results." Link