Executive Compensation

Executive compensation is frequently under moral pressure in public discussions. This article discusses whether high payment of top executives can be ethically justified, and if so, under which conditions. Different arguments are scrutinized. The tentative conclusion is that high executive compensation is generally justified, provided certain conditions are met: No fraud or breach of fiduciary duty must be involved. Also, the ethical rationale behind the market economy must be accepted. However, changes in rules regarding executive compensation can be ethically and economically desirable, such as greater disclosure of executive payment.