Abstract
Recently the topic of executive compensation has received considerable attention in the popular press as well as in the academia. It is argued that “… top executives would get paid handsomely for first class performance, and would lose out when they flopped.“ This study is an attempt to find out whether executive compensation is in fact related to firm performance. Specifically, this study investigates whether the determinants of executive compensation in firms with above average performance are different from those in firms with below average performance. The underlying hypothesis being that the executive compensation in the above average firms is related to performance variables.
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