Question: CEO compensation is a controversial topic. In theory, pay packages should be designed by boards to maximise value on behalf of shareholders. However, many empirical

CEO compensation is a controversial topic. In theory, pay packages should be designed by boards to maximise value on behalf of shareholders. However, many empirical facts may appear inconsistent with optimal contracting. Critically discuss the three main purposes of executive compensation and the two different views of how executive compensation should be set

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