Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 12

Board of Directors as a disciplinary mechanism

This sounds judgmental and it is meant to be. Directors do not spend a great

deal of time overseeing managers, and they are well paid.

The pay shown here understates the true compensation that directors make from

other perks and benefits that they get (pensions, for instance).

(These numbers are from the surveys done by Korn/Ferry, an executive search

firm, and come from a BusinessWeek article looking at the board.)