HCBE Faculty Articles

The Past Present and Future of Executive Compensation

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Business Studies Journal





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Few topics in human resource management are as controversial today as executive compensation. While some argue that executives are entitled to rock star type salaries by virtue of their levels of responsibility, others look at today's generally gloomy economic trends and suggest that not only is no one person entitled to millions of dollars in annual compensation, but that many of today's CEO's are at least partially responsible for the state of the economy today. This purpose of this article is to peel away the emotional overtones and examine executive compensation as an evolutionary phenomenon with historical, social, and regulatory factors. The progression of trends in executive compensation are explored over time as are the most common theoretical lenses used in evaluating the appropriateness of executive pay. The place of the compensation committee is explored along with specific cases which have led to today's perceptions of excesses and the recent regulatory environment. While the focus of this paper is to examine trends and attitudes about executive compensation over time, the end goal is to provide a context within which readers can better form their own opinions of this timely issue.

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