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Is management remuneration too excessive?
Finance & Accounting
Pages 12 (3012 words)
A LITERATURE REVIEW
A literature review on the argument regarding the justification of the excessive salaries and perks offered to the higher management of companies against the services that they offer for the management the day to day affair and decision making.
In an article published in Business Week, In 1980 it was established that the a Chief Executive Officer working at a any foremost organization, on average, makes approximately 42 times compared to what a worker works on a normal hourly pay.
In the next decade, i.e. 1990, this rate had crossed the doubled mark as it was up to 85 times compared to a normal hourly pay of a worker and in the next decade i.e. the twentieth century, the average salary of a Chief Executive Office has climbed to an incredible 531 times of the regular workers’ hourly pay. (Management 2000)
This has been always an argument regarding the fact that the management, especially the top management, such as the Chief Executive Officers, Directors, Chief Financial Officers and the Heads of Departments etc are paid extensively more that the normal employee even though their job is limited to the decision making part while the workers have to put in extra impetus from the planning to the implementation stage.
Let us go research in this respect whether the management remuneration is justified.
Shleifer and Vishny (1997) in their research have described the corporate governance as the means where the providers of funding guarantee a return on their investments for themselves.
Since, the profits of the investors largely depend upon the contracts incurred between themselves and the company so a variety of markets operations and the performance of players of finance has developed into various sub-literatures.
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