January 2016
Intermediate to advanced
480 pages
20h 58m
English
Content preview from Strategic Compensation: A Human Resource Management Approach, 9/e
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Contrasting Executive Pay with Pay for Nonexecutive Employees
1 Explain the difference between executive pay and pay for nonexecutives.
From an economic standpoint, the chief executive officer (CEO) is the seller of his or her services, and the compensation committee is the buyer of these services. Under classic economic theory, a reasonable price is obtained through negotiations that are at arm’s length between an informed seller and an informed buyer. An awkward situation can result when the CEO hires a professional compensation director or compensation consultant. In this case, the compensation consultant who makes the recommendation to the compensation committee works for the CEO. In theory, the CEO hires the consultant to perform an objective ...
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