The focus in recent articles in Business Report on executive remuneration has been on how much executives are paid.

The allegation clearly is that they are paid far too much – relative to the past, relative to the average worker, relative to their state counterparts, relative to corporate performance and (it is implied) relative to their contribution.

Perhaps, before we ask how much "too much" is, or even (as some executives might suggest) "too little" is, we should ask a more fundamental question: what should they be paid for?

Should they – and everyone else for that matter – be paid for results or for contribution?

Currently, executives are paid for results, or so we are told. But are they really? The relative size of the guaranteed portion of the total package, the existence of incentive schemes that only have an upside, and practices such as "golden parachutes", all suggest that in reality executives are not paid for results.

If a "pay for performance" dictum is preached, it should at least be followed. This implies that executives should be guaranteed nothing – their total reward should be variable, and not only a relatively small portion of it. They should be made to genuinely share in both the good and bad fortunes of the company. And why not? After all, business owners do so every day of their lives.

In any event, it is not right to pay for results. Paying for results is like playing a game in a casino. The results are always, at least in part, due to factors outside people's control. People are only in control of their contribution (what they give) not the result (what they get).

Also, because there is a time lag between a contribution and the result it produces, the executive may ride on the back of a predecessor's past excellent contribution or, conversely, pay the price for the predecessor's poor performance. Those who should get rewarded get penalised and vice versa. Finally, paying for results leads to short-term thinking and expedient action, sometimes with disastrous medium- to long-term consequences.

For instance, executives who have stripped out costs and are then paid handsomely for the consequent knee-jerk improvement in the bottom line, often leave behind disabled organisations, which are often beyond recovery.

By what method could executives expect to be paid for their contribution?

They would have to clarify and contract in advance for what they would do to add value. Thereafer, they would have to demonstrate what they actually did to make a positive difference, which could be more or less than was initially promised. They would be rewarded accordingly.

If this was the norm, just think of the possibilities: instead of executives competing with one another for how much they are going to get, they would be striving to outshine their counterparts in terms of how much they are going to contribute. Everyone would win.