Warren Buffet encourages boards to develop meaningful penalties for executives who fail to fully and personally own risk control in their business.
He is, of course, right. In the UK, the Combined Code expects directors and the board to own risk and provides, in the Turnbull Guidance, comprehensive guidance on what is expected.
My impression is that, in the US, the CEO gets stratospheric compensation – and, the bigger and more complex the business, the more s/he gets paid. It seems wrong that the shareholder should stump up the funds for an acquisition, should see their investment savaged if the deal goes sour, have no real control over the acquisition strategy, get to pay the CEO more and more, but for there to be no real penalty for the CEO when s/he screws up – and being forced out with a big compensation package is no penalty.