Michael C. Jensen, a business professor, consultant, and speaker, was one of the early advocates of the larger-than-life compensation packages that have now become the standard fare of boardrooms everywhere.

But now he's revising his thinking in his upcoming book C.E.O Pay and What to Do About It. Now Jensen wants boards to be tougher in negotiating pay packages with executives. But according to The New York Times, not everyone is buying it:

"Imposing the constraints that Michael Jensen has in mind," said Margaret Blair, a professor at Vanderbilt Law School and a specialist in corporate governance, "runs contrary to the culture that has emerged in boardrooms over the last 20 years. Mr. Jensen himself is partly responsible for that culture."

Mr. Jensen complains that too many executives are being paid for breathing, rather than for performance. Furthermore even an incompetent and, in many cases, unethical executive can't be fired without a big severance package.

His proposals make a lot of sense, even if they seem unlikely to ever take hold. I eagerly await his book, as I think bad corporate governance is one of the most serious threats to American business today.

Big CEO pay's biggest supporter changes his mind originally appeared on BloggingStocks on Fri, 28 Sep 2007 18:20:00 EST. Please see our terms for use of feeds.