Given that the CEO is the chief executive and decides on most, if not all, major decisions of the firm, who usually sets his or her pay?
A) the vice-presidents or the second level of executives under the CEOs
B) the shareholders of the firm
C) the unions through collective bargaining
D) a compensation committee

Question

Quizplus · Accepted Answer

The CEO's pay is usually determined by a compensation committee, which consists of a group of independent directors who do not have any conflict of interest. They evaluate the CEO's performance, set goals, and determine appropriate compensation based on the CEO's achievements. This process ensures transparency, fairness, and alignment of the CEO's pay with the company's long-term interests. Shareholders can also vote on executive pay during annual meetings, but their decision is non-binding and advisory only.

Given That the CEO Is the Chief Executive and Decides