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How Much Compensation Can CEOs Permissibly Accept?

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  • Moriarty, Jeffrey

Abstract

Debates about the ethics of executive compensation are dominated by familiar themes. Many writers consider whether the amount of pay CEOs receive is too large—relative to firm performance, foreign CEO pay, or employee pay. Many others consider whether the process by which CEOs are paid is compromised by weak or self-serving boards of directors. This paper examines the issue from a new perspective. I focus on the duties executives themselves have with respect to their own compensation. I argue that CEOs’ fiduciary duties place a moral limit on how much compensation they can accept, and hence seek in negotiation, from their firms. Accepting excessive compensation leaves the beneficiaries of their duties (e.g., shareholders) worse off, and thus is inconsistent with observing those duties.

Suggested Citation

  • Moriarty, Jeffrey, 2009. "How Much Compensation Can CEOs Permissibly Accept?," Business Ethics Quarterly, Cambridge University Press, vol. 19(2), pages 235-250, April.
    • Handle: RePEc:cup:buetqu:v:19:y:2009:i:02:p:235-250_00
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    Citations

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    Cited by:

    1. Burri, Susanne & Lup, Daniela & Pepper, Alexander, 2021. "What do business executives think about distributive justice?," LSE Research Online Documents on Economics 106592, London School of Economics and Political Science, LSE Library.
    2. Susanne Burri & Daniela Lup & Alexander Pepper, 2021. "What Do Business Executives Think About Distributive Justice?," Journal of Business Ethics, Springer, vol. 174(1), pages 15-33, November.
    3. Travis Timmerman & Abe Zakhem, 2021. "Sweatshops and Free Action: The Stakes of the Actualism/Possibilism Debate for Business Ethics," Journal of Business Ethics, Springer, vol. 171(4), pages 683-694, July.
    4. Ann-Christine Schulz & Miriam Flickinger, 2020. "Does CEO (over)compensation influence corporate reputation?," Review of Managerial Science, Springer, vol. 14(4), pages 903-927, August.
    5. Matthew Caulfield, 2021. "Pay Secrecy, Discrimination, and Autonomy," Journal of Business Ethics, Springer, vol. 171(2), pages 399-420, June.
    6. Claude Francoeur & Andrea Melis & Silvia Gaia & Simone Aresu, 2017. "Green or Greed? An Alternative Look at CEO Compensation and Corporate Environmental Commitment," Journal of Business Ethics, Springer, vol. 140(3), pages 439-453, February.
    7. Maria Joutsenvirta, 2013. "Executive Pay and Legitimacy: Changing Discursive Battles Over the Morality of Excessive Manager Compensation," Journal of Business Ethics, Springer, vol. 116(3), pages 459-477, September.
    8. Bahram Soltani, 2014. "The Anatomy of Corporate Fraud: A Comparative Analysis of High Profile American and European Corporate Scandals," Journal of Business Ethics, Springer, vol. 120(2), pages 251-274, March.
    9. Joakim Sandberg & Alexander Andersson, 2022. "CEO Pay and the Argument from Peer Comparison," Journal of Business Ethics, Springer, vol. 175(4), pages 759-771, February.
    10. Jackson, Gregory, 2010. "Understanding corporate governance in the United States: An historical and theoretical reassessment," Arbeitspapiere 223, Hans-Böckler-Stiftung, Düsseldorf.
    11. Stacey Beaumont & Raluca Ratiu & David Reeb & Glenn Boyle & Philip Brown & Alexander Szimayer & Raymond Silva Rosa & David Hillier & Patrick McColgan & Athanasios Tsekeris & Bryan Howieson & Zoltan Ma, 2016. "Comments on Shan and Walter: ‘Towards a Set of Design Principles for Executive Compensation Contracts’," Abacus, Accounting Foundation, University of Sydney, vol. 52(4), pages 685-771, December.

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