Reasons for Compensating Company Executives Handsomely

Executive Compensation
The market trend towards escalating executive compensation reflects the critical importance of an executive to an organization’s long-term viability.
One of the hotly contested debates in HRM is executive compensation. As informed by Weathington and Weathington (2020), members of the public often rail against the compensation accorded to executives particularly when compared to the minimum wage that some workers receive. While there exists a huge difference between executive compensation and the salary of the average employee, the skills and experience required and the responsibility that come with executive positions justify the huge pay the executives receive. Therefore, the market trend towards higher executive compensation only reflects the critical importance of executives to the long-term viability of organizations.
Modern organizations understand that for them to perform and attain long-term success, they have to compensate their executives handsomely. According to Elsayed and Elbardan (2018), the executive compensation has a significant influence on a firm’s performance. In this sense, an organization would be risking low performance if it does not pay high executive compensation. This explains why executive compensation is escalating; that if an organization wants to perform well, it has to pay its executive...