Search results

A revised Combined Code on corporate governance was introduced in the UK in 2003 which set out a number of new provisions relating to the composition of the company's Board of Directors and its main Committees. The Code gives greater prominence to the role of non‐executive directors in a company's corporate governance structures and decision‐making processes. This paper examines the main provisions of the Code relating to non‐executive directors and the emphasis it places on the importance of non‐executives being “independent”.

The paper discusses the main issues concerning the effectiveness of non‐executive directors, drawing in part of the evidence provided by a sample of large UK companies.

Most companies “comply” with the Code's requirements relating to non‐executive directors and endorse the positive contribution they make to Board and Committee work.

Considers the pros and cons of the role of non‐executives and the issue of what constitutes “ independency”.

This is one of the first papers to examine the provisions of the new Code relating to non‐executive directors.

Examines the role of non‐executive directors. Argues that there is universal agreement on the need for outsiders to be involved in company direction and that shareholders are not able to provide the necessary checks and balances to supervise board activities. Examines research on the system of non‐executive directors. Argues that there is a need to develop procedures to select non‐executives that are rigorous and add value. Concludes that non‐executive directors will have increasing influence on company direction.

The purpose of the paper is to provide an informed but personal view on the debate surrounding the role of the non‐executive director and the board.

The approach is that of a practitioner recruiting non‐executive directors. The author offers a personal view.

The author has had extensive discussions with both chairmen and non‐executive directors of FTSE companies and the views in the paper reflect these discussions.

The value of the paper is to stimulate debate and to promote a realistic climate within which business can operate effectively.

This study investigates the relationship between outside directors, managerial compensation, and firm performance in the Korean insurance industry.

The authors employ a simultaneous equation framework by using three-stage least squares (3SLS) to address the endogeneity problems that could result from the joint determination of outside directors, firm performance, and executive compensation in Korean insurance companies.

The authors find that the ratio of outside directors on the board is negatively associated with insurance firm's value and financial profitability. In addition, this study's evidence shows that greater representation on the board by outside directors leads to a higher level of executive pay. In particular, the authors provide evidence that variable compensation scheme and outside directors who have backgrounds in the legal profession and former high-ranking government officials drive this study's main results.

This study adds to the literature by first demonstrating the interaction effects between outside directors, firm performance, and executive compensation in the Korean insurance industry. Unlike previous studies that typically focus on US companies, the authors study the Korean insurance sector that is an emerging power in the global insurance market, ranking seventh in terms of total premium volume, and show that the Korean insurance firm's outside directors system does not work in the manner that it is intended to function.

In a review of the literature, supported by six case studies, executive development for senior managers in public and private organisations is explored in depth. The study looks at the roles and responsibilities of the chairman, CEO, executive and non‐executive directors, the required capabilities to achieve successful performance, and the related executive development activity implemented to support these. Methods of delivery, development needs analysis and evaluation are explored in case organisations to ascertain current practice. A detailed review of the leadership and governance literatures is included to highlight the breadth of knowledge required at director level. Key findings of the study include the importance of focusing executive development on capability enhancement, to ensure that it is supporting organisational priorities, and on its thorough customisation to the corporate context. Deficiencies in current corporate practice are also identified.

In the 1990s various committees (Cadbury, Greenbury, Hempel) reported on governance issues, including the role played by non‐executive directors in promoting “best practice”. Following public concern at cases of “excessive” pay awards to executive directors and financial irregularities the government has recently appointed the Higgs Committee to review again the contribution of non‐executive directors. This paper presents an empirical study of the involvement of non‐executives in large UK companies, assesses the extent to which these companies now “conform” to the recommendations of “best practice” proposed by the earlier committees and looks at the general and specific controversies surrounding the employment of non‐executives as part of companies corporate governance structures.

This paper aims to examine the two different approaches adopted in the UK to regulate directors’ remuneration. The paper also aims to explore the two approaches to understand which one better regulates directors’ pay and why. It provides an account of the two approaches’ evolution, effectiveness and challenges towards the regulation of directors’ remuneration. The paper will also make some recommendations on both approaches and the way forward to better regulate directors’ remuneration.

The paper reviews various corporate governance codes, its recommendations on directors’ remuneration, its effectiveness and the challenges it face in regulating directors’ remuneration. The paper also reviews provisions of the Companies Act 2006 on directors’ remuneration, its effectiveness and challenges faced.

The paper finds that corporate governance adopts a better approach to regulating directors’ pay than the Companies Act 2006 because it targets the pay setting process. However, the existence of grey areas and lack of enforcement procedure poses a challenge on its effectiveness. The Companies Act 2006 is unable to regulate directors’ pay adequately because it adopts a corrective approach and it considers directors’ remuneration as a management responsibility.

The paper offers an up-to-date assessment of the two approaches to regulating directors’ pay in the UK. It highlights the challenges faced by both approaches and which approach could regulate directors pay better and its challenges. The paper further makes recommendations on how the regulation of directors’ remuneration can be effective in the UK.

The purpose of this paper is to examine the influence of family directors and independent directors on executive remuneration of listed family firms in Malaysia, and their involvement in remuneration committee on executive remuneration.

Fixed effect estimation is employed to examine 1,395 firm-year observations from 2010 to 2014.

Family and independent directors do not have statistically significant influence on executive remuneration. Rather, family ownership exerts a significant positive influence on executive remuneration. This study also reveals that the interaction of family CEOs with the family directors on remuneration committee exerts a significant positive influence on executive remuneration.

The measurement of executive remuneration excludes the share options due to the non-disclosure of this information in the annual reports.

The findings would be useful to the policy-makers and regulators in appraising the governance measures of remuneration arrangement.

This study premises on the Type II agency conflict between controlling shareholders and minority shareholders. Independent directors could not mitigate the Type II agency conflict via the governance of executive remuneration. They are not the effective governance mechanism that the minority shareholders can rely on. The additional analyses provide theoretical implication that the pervasive Type II agency conflict is ameliorated when the CEOs do not have family relationships with the controlling family shareholders.

An important characteristic of public limited liability companies is that those which provide a company’s finance are not involved in the running of the business. It is therefore in the interests of the owners (shareholders) to ensure that the management team is implementing policies consistent with shareholder objectives. If the controls imposed by the shareholders are ineffective, the firm’s performance will suffer and it will become a takeover target. Compares the characteristics of a sample of acquired and non‐acquired firms. Finds evidence that acquired firms are less profitable than non‐acquired firms. Results show that the board structures of acquired firms make managerial discretion more likely. Finds that acquired firms are more likely to have a dual chief executive officer and chairman, have a lower proportion of non‐executive directors on the board and have non‐executive directors who are perceived to be less effective.

The purpose of this paper is to examine the empirical relationship between gray directors (non-executive non-independent directors) and executive compensation among companies listed in India’s National Stock Exchange (NSE). The paper also examines the possible interplay of relationships between controlling shareholder duality (controlling shareholder being the CEO), ownership category and executive compensation.

A sample of 438 firms listed in the NSE of India was studied using data spanning five financial years, 2012–2013 to 2016–2017.

Empirical evidence suggests that there is a positive association between the proportion of gray directors on the board and executive compensation. The sensitivity of executive compensation to gray directors is found to be higher among family controlled firms. This research has also found that CEOs who belong to controlling shareholder groups received higher pay than professional CEOs. The authors conjecture that these results suggest cronyism and may contribute to lower levels of corporate governance practices in the country.

The hybrid board structure, which India has adopted with the desire to bring the best of Anglo Saxon and Japanese board philosophies, has paradoxically led to self-serving boards. Exploration of alternative thinking to bring about changes in the regulatory framework is, therefore, necessary.

Serious problems are identified with the philosophy behind board composition mandated by Listing Requirements for Indian firms with empirical evidence showing how the existing rules generate cronyism and unfairness to minority shareholders.