Final answer:
Pay for performance compensation schemes have not necessarily lowered executive compensation levels in response to social pressures regarding excessively high salaries. These schemes align executive pay with company performance.
Step-by-step explanation:
Pay for performance compensation schemes have not necessarily lowered executive compensation levels in response to social pressures regarding excessively high salaries. In fact, these schemes are designed to align executive pay with the company's performance.
Under a pay for performance system, executives receive variable compensation, such as bonuses or stock options, based on the achievement of specific performance targets, such as financial goals or stock price appreciation. If the company performs well and meets or exceeds the targets, executives are rewarded with higher compensation. However, if the company underperforms, executives may receive lower compensation or no additional compensation.
While pay for performance compensation schemes can help to ensure that executives are compensated based on their contributions to the company's success, it does not necessarily mean that executive compensation levels will be lower overall.