The IUP Journal of Corporate Governance
Executive Compensation: The Critique and the Ideal

Article Details
Pub. Date : Jul, 2019
Product Name : The IUP Journal of Corporate Governance
Product Type : Article
Product Code : IJCG31907
Author Name : Purna Prabhakar Nandamuri and Radha Mohan Chebolu
Availability : YES
Subject/Domain : Management
Download Format : PDF Format
No. of Pages : 16



Consequent to the subtle and dynamic business environment and recent corporate failures, the focus shifts towards the emerging challenges for the social, moral and ethical objectives of corporate governance around the world. Executive compensation has emerged as the most contentious issue during the current decade. The exorbitant compensation packages of the senior managers and the resultant extensive gap between the remunerations of the senior managers and the employees and staff at the middle and lower levels has been the focal point for bitter comments from various sections of the society. Corporate boards seem to think that large pay packages stem from fierce competition for talented managers capable of leading global organizations through the turbulent environment. But critics argue that executives get rich at the expense of shareholders and other workers. However, the reality is that the average ratio of CEO pay to average worker pay was 335 times in 2015 compared to 40 times in the 1980s, making a mockery of the ethical ideals, such as Plato's, that no person should be worth more than five times of another. In this background, the present paper attempts to analyze the issue of executive compensation in the light of the ethical ideals.


?As things stand now, many CEOs earn more in a single workday that the average worker makes in an entire year, observes Manfred Kets de Vries, INSEAD Professor of Leadership Development and Organizational Change. In the era of high profile corporate failures, corporate governance (CG) obviously draws public interest and especially the issues that have devastating impact such as executive remuneration, which emerged as a problem itself rather than serving as a mechanism to resolve agency problems.

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