Th e effi ciency argument assumes that the predominant motiva- tion infl uencing the behavior of corporate executives while car- rying out their duties as an executive is personal fi nancial gain in the form of salary. It relies on closely linking the salary to the corporation’s performance, typically measured through the share price. Th is assumption has been explicitly used by those in favor of high executive pay justifi ed by links to corporate per- formance, such as Murphy and Jensen (1990). Th ere are alter- native theories which may be applied to executive motivation that would give diff.
