How To Determine Logical Executive Compensation?

Who, what, where and why? These are all questions that arise from the complex subject of executive compensation, and the individual questions do not exist in a vacuum. Rather, each element that determines executive compensation, such as the type of company and the country where it is located, affects every other element involved. The “gold standard” of executive compensation for many years has been the alignment of pay with shareholder value; however, researchers are beginning to conclude that shareholder value should perhaps not be the be-all and end-all of executive compensation schemes. But with so many competing factors, how should executive compensation be determined? Authors Pascual Berrone, Jordan Otten and Luis R. Gómez-Mejía provide a global perspective on executive compensation and propose possible changes to the dominant view.

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