Jensen (1990) and others used empirical evidence to demonstrate that there was a link between large pay bonuses provided to executives on a performance basis and improved corporate performance . Th ese theories in part motivated the trend be- ginning in the 1990s of deliberate struc- turing of corporate executive salaries to match performance of the corporation as closely as possible, usually through options to purchase shares in the com- pany on advantageous terms off ered to the executive. Over time the under-cost- ing and over-issuing of such bonuses has led to much higher salaries and Jensen’s objectives not being realized. .
