On threat of outside takeovers Fama says
... it's a unique discipline that corporations have that other forms of organization don't have. For example, it’s very difficult to attack the University of Chicago in that way. It doesn't need a takeover defense because there’s no real way to attack it. For a corporation, on the other hand, there was a way. That allowed corporations to have expert boards because the board wasn't the court of last resort. But the institution of all antitakeover amendments threw a wrench in the process.
On CEO compensation he says
If the [compensation] process gets captured by the CEO, then it can get corrupted. But if what you're seeing is a market wage, then I don't know why you would say it's too high. If it's a market wage, it's a market wage. I don't know of any solid evidence that the process was corrupted. So my premise would be that you're just looking at market wages. They may be big numbers; that's not saying they're too high. It's easy to say that people are paid too much, but when you're on the other side of the fence trying to hire high-level corporate managers, it turns out not to be so easy.
Bebchuk and Fried would seem to offer evidence that the compensation process is corrupted. The Bebchuk and Fried view is that, in fact, the process has been captured by CEOs. Their whole point is that executives use the power they have to pay themselves large amounts which are not related to performance. Pay is not being determined by the market.
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