Determinants of Executive Compensation

Abstract

from the vagaries of individual leadership, the control and the goal formation process have moved to the management group. In response the corporation has adapted its style, performance, and reward structure to the dominance of the professional manager. The management group tends to be motivated by identification with the company's expansion. In turn, the organization rewards management with a larger organization and a higher salary structure. There is a strong correlation between sales, management compensation, and employment in the large corporation. Beginning with Berle and Mean's observation that effective control of the largest industrial corporations had passed into hands of management, debate has raged over the implications of the change in control [2]. The result has been a great deal of speculation over the impact of management control on the performance of the corporation. Most recent investigations have been tied to Baumol's revenue maximization hypothesis