Determinants of managerial compensation: An empirical exploration

Data on managerial compensation, past performance ratings, and human capital variables (specifically education and work experience) from a manufacturing unit in India were explored in order to explain the variation in total and budgeted variable compensation. The results obtained provide support for the influence of human capital as well as performance variables on compensation. Human capital variable (specifically education) probably impacted compensation structure through market value in a way that could be dubbed elitist. There was some reflection of tournament view also (more differential for higher designation) on compensation. Keywords: Compensation, Incentive design, Pay for performance, Variable pay, Managerial compensation, Compensation management