) ). the proportion of companies remunerating their ceos in stock more than doubled. those trends have continued apace in the two decades since. in 1994, us ceo compensation was split roughly one third salary, one third bonus and one third stock and stock options. by 2006, the dawn of the crisis, that split was less than 20 % salary, less than 30 % bonus and more than half stock and stock options. among banks, the latter fraction was higher still. whether this shift in compensation practices put a lid on ceo rent - seeking seems altogether more questionable. experience in the run - up to the crisis suggests, if anything, the opposite. paying in equity appears to have increased the probability of failure. among us bank ceos pre - crisis, the top five equity stakes were held by dick fuld ( lehman brothers ), jimmy cayne ( bear stearns ), stan o ’ neill ( merrill lynch ), john mack ( morgan stanley ) and angelo bis central bankers ’ speeches mozilo ( countrywide ). this is not a random sample. 16 it also suggests the macro - economic costs of this principal / agent problem may have been non - trivial. ( b ) collective action problems : the “ ownerless corporation ” a second stakeholder friction arises because a diffuse and dispersed set of shareholders are likely to find it difficult to corral management ( shleifer and vishny ( 1986 ) ). there is a coordination problem among shareholders. moreover, most individual shareholders tend to have modest amounts of skin in the game. this reduces their incentives to exercise corporate control in the first place. this shareholder collective action problem is not new. it lay at the heart of berle and mean ’ s concern about “ ownerless corporations ” in the 1930s. but there are good reasons for believing this problem may have become more acute since then, as the shareholder base has become more fragmented and diffuse and shareholder co - ordination more difficult ( kay ( 2012 ) ). one reason is that the role of institutional investors has changed. they have tended historically to play an important stewardship role. but this role has waned. as recently as 1990, pension funds and insurance companies held more than half of uk equities. today, that fraction is less than 15 %. there has also been a sharp fall in the fraction of shares held directly by individuals, from more than 50 % in the 1960s to little more than 10 % today. today, these individual holdings tend to

markets, and their dynamism has to a large extent offset slower growth elsewhere. in my view this is not a flash in the pan, but a structural feature of the world economy that we are now living in, and we should expect a continuing impetus to global growth from this direction. however, as we saw in the mid - 2000s, there is also the associated risk of upward pressure on inflation from global energy and other commodity prices, if the momentum of world growth becomes too strong. fourth, the high degree of stimulus provided by fiscal and monetary policy to combat the recession will need to be withdrawn over a period of time. returning budget deficits to a more sustainable level will require a prolonged tightening of fiscal policy in many countries, including the uk. monetary policy can provide an offset by continuing to support the growth of private spending – though the appropriate degree of monetary stimulus will need to be continually reassessed in the light of the progress of the recovery at home and abroad and its impact on inflationary pressures. given the turbulence we have seen in the major economies of the world over the last two years, it is very natural to worry about setbacks to the recovery, both in the uk and overseas. in the past, economic recoveries have not been smooth and linear. so we should expect to see some variability in growth rates, both at home and abroad, as this recovery develops. however, looking through this data volatility, there are also good grounds for expecting the growth of the world economy to continue to provide a healthy support to the uk ’ s economic recovery over the years ahead. and, over time, that is likely to bring a different set of policy challenges to the ones we have been facing over the course of the recession.