Benefits Of A Executive Compensation

1390 Words Jan 27th, 2016 6 Pages
Introduction
Over a long period of time, many shareholders in various companies have been complaining about the high executive compensation in the companies. They believe that such executives are draining the resources of such companies at the expense of the shareholders.
Despite the non-binding votes from the shareholders against high levels of executive pay, many companies have given a deaf ear to them. Reduction of executive compensation has been a major challenge to many companies. There are various impediments in effecting a reduction in executive compensation.
Hiring and retaining top-caliber executives. In the modern cut-throat competition business world, companies are looking for the best executives, who can lead the company into success. To achieve such an objective, companies have to offer higher executive compensation.
In addition, so as to retain the best executives who are still working for the company, there is need to maintain a higher level of executive pay, otherwise such top talent will be lured away by other companies. This may have the adverse effects of leading the company into poor performance, and consequently, failure. Therefore, it is paramount that executive compensation is maintained at its best for the overall good of the company ((Hartzell & Starks, 2003).
Reinforcement of succession planning process. It is important that an organization prepares top-notch executives to take over leadership of the company in the future. Without

2 proper planning…

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