ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Whether CEO pay is justified remains subject to fierce debate. On one side, free-market economists argue high executive pay is justified if it aligns with the interests of executives and shareholders. If businesses are willing to pay these sums, they say, that is value that the market thinks the executives are worth.

Detailed explanation-2: -Influencing factors of executive compensation Following factors are considered to have the greatest effect on structure and level of executive compensation, as well as its components: organizational size, organizational growth opportunities, organizational risk, equity structure, ownership structure, manager age.

Detailed explanation-3: -Disadvantages: Because your compensation is deferred, you don’t have access to the funds until you receive them, at which time you will pay taxes on the income. There are some other aspects of these plans to consider as well, including that they can’t be rolled over into an IRA like a 401(k) or 403(b).

Detailed explanation-4: -There are multiple ethical issues with executive compensation. These include whether such compensation is excessive compared against provision of service and whether the compensation process is compromised by inadequately transparent negotiation (Perel 2003, p. 381; Moriarty 2009, p. 235).