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Dialogue: CEO Compensation

Published online by Cambridge University Press:  20 July 2015

Robert Kolb  and
Jeffrey Moriarty
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Abstract:

In this journal, Jeffrey Moriarty argued that CEOs must refuse to accept compensation above the minimum compensation that will induce them to accept and perform their jobs. Acting otherwise, he maintains, violates the CEO’s fiduciary duty, even for a CEO new to the firm. I argue that Moriarty’s conclusion rests on a failure to adequately distinguish when a person acts as a fiduciary from when she acts on her own account as a person. Further, Moriarty’s argument assumes that the CEO knows this minimum level of compensation. However, we learn the suitability of compensation only through the market process of wage negotiation, not through some process of introspection. I conclude that a CEO who abstains from interfering with the board of directors and its compensation committee is morally free to negotiate for the highest wage available.

Type
Articles
Information
Business Ethics Quarterly , Volume 21 , Issue 4 , October 2011 , pp. 679 - 691
Copyright
Copyright © Society for Business Ethics 2011

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