1,000 in 1974-86.Р10. The average salary plus bonus for top-quartile CEOs (in 1986 dollars) fell from $813,000 in 1934-38 to $645,000 in 1974-86, while the average market value of the sample firms doubled. РThe lack of strong pay-for-performance incentives for CEOs indicated by our evidence is puzzling. We hypothesize that political forces operating both in the public sector and anizations limit large payoffs for exceptional performance. Truncating the upper tail of the payoff distribution requires that the lower tail of the distribution also be truncated in order to maintain levels pensation consistent with equilibrium in the managerial labor market. The resulting general absence of management incentives in public corporations presents a challenge for social scientists pensation practitio
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