Executive compensation has been a topic of significant interest and debate among scholars and stakeholders due to the persistent increase in pay for top executives. This paper presents an overview of executive compensation, its impact on a company's performance, and the traditional belief that high compensation is tied to performance. The paper also examines the different components of CEO compensation in developing countries such as Nigeria. The paper explains the agency theory, which concerns resolving the conflict that arises from the difference in objectives between the principal (shareholders) and the agent (executives). Corporate governance measures such as executive and board compensation plans have been put in place to improve internal control and align the goals of management with those of shareholders, thereby reducing the agency issue. The study highlights the need to align CEO compensation with their performance for sustained returns for shareholders
