Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 16

Top executives of European firms are typically paid substantially less than the top executives of American firms. They are also paid differently. For example, stock options are much more common among American than European executives. Do these differences imply that (a) American executives are overpaid, and (b) that the form of the compensation in either America or Europe is suboptimal Explain.