There is a debate about the tremendous rise in top executive pay. For some people it is only injustice, for others it is also a reason for corporate scandals and financial crisis.
It is not only that pay is often for non-performance. Executive pay for performance is regarded as a governance tool similar to, say, supervisory boards; but it has become highly questioned. The idea is based on the carrot and stick principle, but it represents an enormous incentive to manage earnings, short term orientation and ignoring risks. Executive pay systems poisoned rather than to have cured corporate governance.
Complex and dynamic business environments make it difficult both to measure corporate performance and to describe its drivers. Thus, the question arises whether, for instance, non-financial and ethical values are as relevant to corporate success as financial value enhancement. But a lack of transparency may open up such systems to manipulation.
Title photo cited from: Claudia Deutsch, A Brighter Spotligth, Yet the Pay Rises, The New York Times, April 6, 2008
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January 20, 2009 at 1:01 am
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