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What’s Wrong with Executive Compensation?

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Abstract

I broadly explore the question by examining several common criticisms of CEO pay through both philosophical and empirical lenses. While some criticisms appear to be unfounded, the analysis shows not only that current compensation practices are problematic both from the standpoint of distributive justice and fairness, but also that incentive pay ultimately exacerbates the very agency problem it is purported to solve.

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Acknowledgments

I thank Norm Bowie for his many comments and suggestions on this topic, as well as David Souder. Thanks also to students in Norm’s executive MBA classes that I helped teach over the years. I also thank participants at the 2007 International Vincentian Business Ethics Conference for their comments on an earlier version of the article. All errors remain my own.

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Correspondence to Jared D. Harris.

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Harris, J.D. What’s Wrong with Executive Compensation?. J Bus Ethics 85 (Suppl 1), 147–156 (2009). https://doi.org/10.1007/s10551-008-9934-6

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