DB Forum 4 Reply to Jay BMAL 560 Ola Adebowale Liberty University Jay, in reading your report, the points stated on agreeing with executives being compensated highly are well articulated. I particularly like the fact you put across on paying top dollars for performing executives to ensure they don’t go elsewhere as CEO turnover risk is significantly positively associated with pay (Edmans & Gabaix, 2016) and thus key to factors on executives to having low attrition. The reality is that executives are also employees with expectations relative to their pay, and thus want to be where they are most valued relative to compensation, and compensation will continue to be key motivation factor for employees, and in particular executives, which they use determining if they are valued or not. Your point on risky behavior by company executives, stipulating that they will likely behave ethically when compensated very well comes with a sentiment that it shouldn’t be a factor on their actions. I do agree that it will deter a lot of executives from taking unethical actions as they might find little to no reason to wanting to enrich themselves at the expense of the company, but I believe the ethical nature of decisions being made by executives or even any individual is engrained in the morals and culture within the organization and alignment to biblical principles The fact remains that executives need to be compensated for what they are worth in the market place as not many individuals are capable of running today’s large, complex organizations (Ficsher n.d), and the ability to attract the best and brightest executives to
companies will be easier. At the end its key for organizations to successfully ensure that their
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- Summer '14
- Management, Ola Adebowale