The Remuneration of the Chief Executive Essay Example | Topics and Well Written Essays - 2000 words

The Remuneration of the Chief Executive - Essay Example Although target remuneration levels are aligned to the market, excellent performance by both the company and by the individual executive director is rewarded with higher bonus levels and share awards, taking potential total remuneration to the upper quartile or higher of the company’s key international competitors. Base salaries of employees are determined in a similar way to those of executive directors. The company’s approach is to ensure that target total compensation is benchmarked to the relevant market in which the individual is employed. The objective of this study is to analyze whether the CEO’s remuneration is in some way related to the performance of the firm or results from the position and power of the chief executive. Most of the studies conducted earlier consider whether CEO pay is determined by the performance of the company they manage or whether it simply relates to the influence which the CEO has over the board of directors. Several other factors such as the size of the company, number of executive directors on the board, sales growth of the company have also been considered in this study to understand the significant factor that decides the remuneration of the CEO. Some studies conducted indicate that if the CEO is also the Chairman of the company, this person has an undeniable influence on the decisions of the board. Hence the influence of the position of the executive director is also studied in this analysis. From the above analysis, it is concluded that the salary of the CEO is much higher when he is the Chairman of the company. The position and power of the CEO play a significant role in determining the salary despite the poor performance of the company. The higher the proportion of executive directors on the board, the higher is the salary of the CEO. Â