4 Expansion of function

The emergence of this more financial-economic vision resulted in a third change – an expansion of the function of remuneration. Before the rise of the pay-for-performance approach, executive compensation was mainly intended to reward executives for the high-quality work they were performing. In addition, the total amount of the remuneration should be such that executives would want to work for the company and continue to work for it (attract and retain). The variable part of the remuneration served two important goals, namely guaranteeing cost efficiency and motivating the executive to work hard on behalf of the general profitability of the company. In this way, the remuneration was also a token of appreciation for positive results. This traditional view of remuneration requires that the remuneration is reasonable in the light of the achieved general success of the company.