Executive compensation is supposed to be an effective mechanism to reduce the manager's (as the agent) opportunism. Do you think the current executive compensation system is perfect? (In an economic crisis, the compensation of the CEOs or top-level managers of many unsuccessful businesses is high or even increased. In other words, CEO's pay is not consistent with the firm performance). (1 pt) Do we have a solution? Please discuss the two alternate approaches - "Say on Pay", and "increase the share of base salary in the compensation package and reduce performance-based incentives such as cash bonus, stocks or stock inn (right now a maiority of the compensation for the top executives are from the incentives)

Answer rating: 100% (QA)

The current executive compensation system is far from perfect as evidenced by instances where CEOs and toplevel managers of unsuccessful businesses st... View the full answer