Origins of the Principles for Review of Executive Compensation 1992-93

This paper looks at the 1992-3 compensation controversy at the University of California in light of the factors that shaped the board’s policy response to the controversy, the Principles for Review of Executive Compensation. It discusses the events of 1992-3 in the context of the public and political debate over the appropriate model for executive compensation in elite public universities and the special difficulties these universities face in setting, explaining, and defending executive compensation policies and practices. It concludes by assessing the ways in which the University did and did not succeed in addressing the issues raised by the controversy—including the clash between public-service and market perspectives.