Question: Executive compensation, based on performance, can theoretically constrain pay, but companies are paying their top executives more and more. The median compensation of a CEO

Executive compensation, based on performance, can theoretically constrain pay, but companies are paying their top executives more and more. The median compensation of a CEO in 2013 was $13.9 million, up 9 percent from 2012.

What is the economic problem that CEO compensation schemes are designed to solve? Would paying executives with stock align their interests with shareholders?

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