Optimal contracts and CEO pay

Are CEO compensations in modern corporations optimal? This work researches the question. The first chapter contains review of the topic, descriptions of basic concepts and introduction to evolution of compensation models. The second chapter provides an overview of a typical CEO compensation, how is it structured, what are the drivers of its rate and how the process of transferring the compensation utility to the executive officer looks like. In the third chapter optimal compensations for CEOs of studied companies are calculated and compared to their actual compensations. In addition weaknesses of the used model and difficulties associated with its practical application are detected.