CEO Compensation Trends in the Republic of Serbia in the Context of EU Integration

CEO compensations are an effective instrument for adjusting the interests of managers and equity owners, so that full engagement and commitment can only be expected of managers who are sufficiently motivated. Among other things, sufficient motivation is achieved by the use of adequate CEO compensations. This paper analyzes applied models of CEO compensation, and their levels, in the Republic of Serbia and EU member countries. Comparison of CEO compensation in the Republic of Serbia and EU countries will enable the positioning of the Republic of Serbia in the context of EU integration; as well as enable Serbian business organizations to track trends that are current, and structure their CEO compensations to meet managers’ expectations in terms of attractiveness, and equity owners in terms of cost efficiency. The paper will try to determine the existing differences in CEO compensation levels, conditioned by the degree of economic development of the observed countries. The paper will analyze the factors that directly or indirectly affect the level of CEO compensation. It will try to determine which components of CEO compensation are mostly used in business organizations from the EU, and compare the results with business organizations from the Republic of Serbia in order to improve existing practice. As CEO compensations are still underdeveloped area in the Republic of Serbia, the contribution of the paper is expected to be significant, for Serbian business organizations that operate, or plan to operate, on the international market, and allow their managers to work in EU countries. Strategy and policy of CEO compensation is a very sensitive area, so the focus of the paper is on identifying existing differences that could be used in terms of convergence of the CEO compensation practice in the Republic of Serbia to the one that is present in the more advanced EU countries, in the context of EU integration.