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Question 1. Discuss which theories explain the growth in executive compensation in the banking industry.

Question 1.
Discuss which theories explain the growth in executive compensation in the banking
industry.

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Answer #1

Marginal productivity theory and efficiency wage theories are few of the theories related to executive compensation that explain the growth in executive compensation in the banking industry.

Marginal productivity theory will talk about the compensation based on the return generated by the executive so the higher the growth of return then higher the growth of compensation for the executive.

Efficiency wage theory will motivate executive to work more for get paid extra due to which executive put extra effort to get above market level salary.

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