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How much should bosses be paid?

Graham Watson

18th December 2019

Tim Harford looks here at one of my favourite areas of economics, executive pay. We've linked to an exemplar essay answer on this topical question.

This takes in both basic salaries, as well as performance-related pay and stock options and - spoiler alert - concludes that there's little evidence to suggest a link between executive performance and salaries.

Indeed, some of the claims made are remarkable: "In their book Pay Without Performance, Lucian Bebchuk and Jesse Fried argue that directors don't actually care about linking pay to performance, but must "camouflage" this indifference from shareholders."

On the same day we have published this blog entry, we have had the news that Denise Coates has cemented her status as one of the UK's highest paid chief executives.

A Level Economics Synoptic Essay Guide: Executive Pay Caps

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to Tutor2U, reads voraciously and is interested in all aspects of Teaching and Learning.

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