Corporate America is stuck in a rut, and it is holding back economic growth. Despite record-low financing costs, capital-expenditure plans at large firms are down, R&D is being cut, and mergers and acquisitions are at a virtual standstill. This corporate age of austerity is a failure of governance—not just in Washington but in public company boardrooms.

In the name of risk management, corporate boards have lost the "owner" mentality they need in designing management compensation. Too many CEOs are now better off being caretakers instead of value creators. Surprisingly, the solution may entail more compensation for CEOs, not less—but only ...Read the rest on WSJ