How Power Determines Executive Pay
RESEARCH: The distribution of power between the CEO, the board, and shareholders is a key influence on CEO pay, suggests new research from St. Gallen University.With talk of government action to curb top executive pay, in the UK, CEO compensation is headline news. But how should it be set? Some have suggested using top-to-median pay multiples to fix top executive compensation; but surely this would send the pay of Goldman Sach’s CEO into the stratosphere while limiting the CEOs of big ‘employers’ like MacDonald’s or Walmart - hardly a valid aim. Others have called for ‘transparency’ as a panacea; but is it? Might in fact the availability of data that allows internal and external comparisons increase pay ‘ratcheting’.
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