Responsibility for negotiating executive compensation scheme

By | July 12, 2013

According to Sandra M. Reed and Anne M. Bogardus (2010), the responsibility for negotiating executive compensation scheme is falling on the board of directors (BOD) which is a body of elected or appointed members who jointly oversee the activities of a company or organization. The board of directors (BOD) is anticipated to negotiate the overall executive compensation scheme with the relevant executive candidates at “arm’s length”. Since the relevant executive candidates are mostly good negotiators and they will always bargain for the best offer that they can get in their own interest, the board of directors (BOD) needs to on one hand retain the talented and valuable in the company and also on the other hand protect the company’s interest by not giving out over compensation that creates financial burden to the company.

 

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