The role of ethics in executive compensation: Toward a contractarian interpretation of the neoclassical theory of managerial renumeration [Book Review]

Journal of Business Ethics 13 (2):81 - 93 (1994)
The topic of Chief Executive Officer (CEO) compensation has been a focus of interest for many years. The purpose of this article is to explore the ethical dimensions of various generally accepted theories of CEO renumeration. We argue that a contractarian approach, based on the Kantian ethical framework, can be used to augment the existing contingent pay models.While the neoclassical economic model of the firm views the maximization of the shareholders'' wealth as the sole responsibility of top management, a contractarian approach regards the balancing of various stakeholders'' interests as the primary task of top management. Ethical problems emerge when there are divergent, yet equally justifiable interests which compete in order to channel organizational resources to meet their own needs. In this situation, given the inherent ambiguities and ever present possibilities of multiple perspectives, it may not always be feasible to provide a categorical answer to the question of whether the CEO''s decisions are ethical. We suggest that a broad interpretation of the neoclassical theory of the firm, one that is grounded in Kantian and contractarian ethics, can serve as a basis for a reconciliation of different theories of executive compensation.
Keywords No keywords specified (fix it)
Categories (categorize this paper)
DOI 10.1007/BF00881576
 Save to my reading list
Follow the author(s)
My bibliography
Export citation
Find it on Scholar
Edit this record
Mark as duplicate
Revision history Request removal from index
Download options
PhilPapers Archive

Upload a copy of this paper     Check publisher's policy on self-archival     Papers currently archived: 15,904
External links
Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library
References found in this work BETA

View all 11 references / Add more references

Citations of this work BETA
Marjorie Chan (2008). Executive Compensation. Business and Society Review 113 (1):129-161.

Add more citations

Similar books and articles

Monthly downloads

Added to index


Total downloads

44 ( #75,821 of 1,725,443 )

Recent downloads (6 months)

4 ( #167,246 of 1,725,443 )

How can I increase my downloads?

My notes
Sign in to use this feature

Start a new thread
There  are no threads in this forum
Nothing in this forum yet.