A rare piece that adds something truly thoughtful, though still debatable, to the discussion of executive compensation, from Emirates' Business 24/7:

The field of executive compensation has long been dominated by "agency theory", which predicts a "positive relationship between executive compensation and firm economic performance". According to this view, managers receive pay-for-performance awards in order to give them incentive to pursue the shareholders' values; pay is established based on "arm's length contracting between shareholders and management".

Though this line of thought is pervasive among researchers (it's often considered the 'neoclassical' approach), the surprising truth is that little evidence exists to support such a relationship between executive pay and firm performance. In fact, some researchers attribute recent corporate scandals to the overemphasis on maximising shareholder value, without regard for the effects on other stakeholders...

With all this in mind, a new question arises: What's missing in executive compensation plans? The answer is clear: social responsibility. In the wake of corporate scandals such as Enron, in which highly paid but unethical executives wrecked havoc on their workers' lives, business ethics and corporate social responsibility have entered the discussion around executive compensation.