A company offer a competitive compensation arrangement in order to attract, retain, and motivate a qualified CEO to manage the organization. This quick guide examines the elements of executive compensation and the process by which the compensation committee establishes pay packages. It examines the questions: What is the purpose of a compensation program? How do boards structure pay? What is the difference between expected, earned, and realized pay? How much do CEOs make? Are CEOs paid the “right” amount?
Copyright held by David F. Larcker and Brian Tayan. Further inquiries about reproduction and use should be directed to the Corporate Governance Research Initiative.
