Executive Pay

Running head: EXECUTIVE PAY 1
Executive pay
Student Name
Institution

EXECUTIVE PAY 2
ARTICLE 1.
Satisfied board, satisfied stakeholders.
Money matters will never fail to raise eyebrows whenever that name is mentioned.
Executive pay usually refers to compensation that is accorded to top management of different
organizations all over the world. The executive pay is important as it is aimed at improving the
corporate governance of the organization. The remuneration is usually enjoyed by the board
members and other top officers who are answerable to the board. The pay usually consists of
financial and non-financial considerations. The executive pay is usually approved by the
shareholders during the annual general meeting by adopting the remuneration report. The
executive pay is different from salaries which are paid to the rest of the employees of the
organization as the expense is incurred on special occasions such as after conducting a meeting.
The executive pay is in the form of allowances and bonuses which are entitled to the top
management members after achieving a certain objective.
Avoid corruption
The best performing organizations all over the world have executive pay which is high
and which satisfies the board members. Board members are not entitled to monthly salaries like
the rest of the employees in the organization. This calls for the need to pay the executive
members handsomely so as to enable them to conduct their duties effectively. This will help to
avoid cases of top management being bribed in order to approve some decisions which are not
consistent with the values, mission, and vision of the organizations. The board members become
more committed to ensuring the organization succeeds as decisions are made with the best
interest of the firm in place. This will help to avoid biased decision which will not lead to

EXECUTIVE PAY 3
maximizing the value of the shareholder but increasing the earnings of the board members. High
executive pay will help the board members to be shielded from corruption cases as their price
will be high and people who need favors will have to cough out large amounts of money which
are unrealistic and this will help the top management to act ethically and practice integrity and
honesty. This will help the firm to avoid legal fees for solving different cases involving the
company and third parties due to poor decisions made by the top management of the
organization. Corruption free organizations usually enjoy a good reputation and untainted public
image which can be used to improve the revenues of the business.
Talent acquisition in boardroom
High executive pay according to research by different scholars and institutions leads to
attraction and retention of top talents in the industry. The board should be well balanced in terms
of gender and experience. The top management should have experience in different aspects of
the organization for the firm to operate effectively. High compensation will attract good
corporate governance in the firm as experts in the industry are willing to take part in the board of
the firm and this will help to ensure a board that promotes gender equality and good corporate
governance. The executive compensation can also be in the form of shares or call options. This
type of compensation will encourage top management to act in the best interest of the firm so as
to gain more benefits from the sale of shares and executing the call options. National Australia
bank should, therefore, re-examine their decisions as they may be shooting down their golden
star.