DETERMINANTS OF EXECUTIVE COMPENSATION AND ITS IMPACT ON ORGANIZATIONAL PERFORMANCE

The purpose of this study is to develop and test a model of the determinants of executive compensation and its impact on organizational performance for a unique sample of Pakistani Companies. A questionnaire was developed for the proposed study and was used to measure Executive Compensation against these determinants. The sample consists of 63 executives from the organizations of Pakistan i.e., Islamabad, Lahore and Karachi. The result indicated that measures job complexity, employer’s ability to pay and executive human capital gives details of a significant explanation of the variance in the executive compensation. After data collection process, the given data was tabulated. Data was analyzed through Regression Analysis, Multiple Regression Analysis and Correlation tests. Collectively the independent variables accounted for almost 67% of the variance. The result indicates that company size is closely related to job complexity and employer’s ability to pay. Both these variables succeed to capture the variance in executive compensation accounted for company size.