Open AccessThe wrong perspective on executive pay
Author(s) -
Alexander Chau
Publication year - 2016
Publication title -
corporate board: role, duties and composition
Language(s) - English
Resource type - Journals
eISSN - 2312-2722
pISSN - 1810-8601
DOI - 10.22495/cbv11i1art1
Subject(s) - remuneration , corporate governance , transparency (behavior) , perspective (graphical) , executive compensation , agency (philosophy) , politics , accounting , corporate title , business , orthodoxy , law and economics , economics , political science , finance , law , sociology , social science , archaeology , artificial intelligence , computer science , history
Controversial commentaries as brought on by the financial crisis of 2008 regarding corporate remuneration policies give misplaced priority to political considerations over the governance considerations of capitalist orthodoxy. Executive pay rules during the crisis reflected the market’s sense of low risk that was prevalent at the time. The existing pay-for-performance model as applied demonstrates that the agency problem is not widespread and more a matter of transparency than one of systemic corporate graft. The wrong perspective involves pushing for social equality, rather than business efficacy, as the ultimate driver of reforms in executive remuneration.