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Executive Compensation: The Law And Incentives, Stas Getmanenko

Stas Getmanenko

Excessive executive compensation frequently breeds resentment, undermines consumer faith in the financial system, and overly stigmatizes otherwise common business failures. Frequently, the opponents of lavish pay packages compare executive compensation to the compensation of rank-and-file workers. Such criticism reflects perfectly appropriate societal concerns over pay equity and distribution of wealth within a society. An entirely separate source of friction is the shareholders’ right to benefit from the corporation’s wealth. Shareholders’ dividend is directly reduced by the company’s expenses, one of which executive compensation. For most of today’s public companies the executive compensation expense is often negligible when considered in light …