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Article

Ernestine Ndzi

The purpose of this paper is to investigate the factors that remuneration consultants consider when selecting comparator groups for executive remuneration benchmarking. It…

Abstract

Purpose

The purpose of this paper is to investigate the factors that remuneration consultants consider when selecting comparator groups for executive remuneration benchmarking. It explores how the different factors influence the level of pay and whether the factors encourage pay-for-performance. Furthermore, it investigates whether the factors used form part of the reasons why remuneration consultants have been criticised to be correlated with high executive pay.

Design/methodology/approach

This paper analysis the data obtained from interviewing remuneration consultants from prominent consultancy firms that operate in the UK and the USA.

Findings

This paper demonstrates that there is no uniformity in the factors used by remuneration consultants when selecting comparator groups for executive remuneration benchmarking. The paper shows that company performance is not a major factor considered justifying why executive pay is not linked to company performance. The paper further demonstrates that the factors that remuneration consultants consider in selecting comparator groups for executive remuneration benchmarking justify high pay and affirm that remuneration consultants are associated with high pay.

Originality/value

This paper demonstrates the effect that lack of best practice on benchmarking is partly responsible for the high executive pay levels and the weak link between pay and performance. This paper will inform companies on what to demand from remuneration consultants when hiring their services. Second, it will provide the shareholders with vital information that they need to vote on remuneration reports in the annual general meeting. Finally, it informs policy makers on the grey areas of practice that require best practice.

Details

International Journal of Law and Management, vol. 57 no. 6
Type: Research Article
ISSN: 1754-243X

Keywords

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Article

Ernestine Ndzi

The purpose of this paper is to investigate the nature of advice that the remuneration consultants offer to the companies on executive pay. It explores how the advice…

Abstract

Purpose

The purpose of this paper is to investigate the nature of advice that the remuneration consultants offer to the companies on executive pay. It explores how the advice offered affects the level of executive remuneration. Furthermore, it investigates whether the nature of advice offered forms part of the reasons why remuneration consultants have been criticised to be correlated with high executive pay.

Design/methodology/approach

This paper analysis the data obtained from interviewing remuneration consultants from prominent consultancy firms that operate in the UK and the USA.

Findings

This paper demonstrates that remuneration consultants’ advice on executive remuneration is not always objective. The nature of advice depends on whether the consultants have a balance of portfolio of companies (self-interest) or whether they have the courage to stand up to confrontations from the executives (fear of executives). This study shows that the purpose of using remuneration consultants in advising on executive remuneration is defeated. Also, the practice pushes up pay levels.

Research limitations/implications

The research focused on large consultancy firm operating in the UK and/or the USA. Access to the participants was very difficult due to their busy schedules.

Practical implications

This paper demonstrates the effect that lack of best practice on benchmarking is partly responsible for the high executive pay levels.

Social implications

This paper will inform companies on the nature of advice that remuneration consultant’s offer and its effect on pay levels. Secondly, it will provide the shareholders with vital information they require to vote on remuneration policy in the annual general meeting.

Originality/value

This paper demonstrates the effect that lack of best practice on benchmarking is partly responsible for the high executive pay levels. This paper will inform companies on the nature of advice that remuneration consultant’s offer and its effect on pay levels. Secondly, it will provide the shareholders with vital information they require to vote on remuneration policy in the annual general meeting. Lastly, it informs policymakers on the grey areas of practice that requires best practice.

Details

International Journal of Law and Management, vol. 57 no. 4
Type: Research Article
ISSN: 1754-243X

Keywords

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Article

Ernestine Gheyoh Ndzi

The paper aims to examine the role of human greed in the determination of executive remuneration in the UK.

Abstract

Purpose

The paper aims to examine the role of human greed in the determination of executive remuneration in the UK.

Design/methodology/approach

The paper reviews the past and existing regulation and corporate governance recommendations on executive remuneration.

Findings

The paper demonstrates that the failure of regulatory mechanisms to curb excessive executive remuneration can be justified on the grounds of human greed. Greed is facilitated by the potential conflict of interest that exists as a result of the executives’ position in the company. The position of the law has given greed the opportunity to manifest, making it quite difficult for executive remuneration to be effectively regulated.

Originality/value

The paper adds to the existing debate on excessive executive remuneration by demonstrating that human greed is the basis of excessive executive remuneration on which limited literature exists.

Details

Journal of Financial Crime, vol. 26 no. 4
Type: Research Article
ISSN: 1359-0790

Keywords

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Article

Ernestine Ndzi

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

Details

International Journal of Law and Management, vol. 58 no. 3
Type: Research Article
ISSN: 1754-243X

Keywords

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Article

Ondřej Hradský

The purpose of this paper is to analyse 100 of the largest family firms and their personnel costs and employee numbers compared to non-family firms in the Czech Republic…

Abstract

Purpose

The purpose of this paper is to analyse 100 of the largest family firms and their personnel costs and employee numbers compared to non-family firms in the Czech Republic and confirm if there exist differences between personnel costs for family and non-family firms.

Design/methodology/approach

The sample consisted of 100 family firms and 97 non-family firms from the Czech Republic for the comparison. Four hypotheses about relation between personnel costs for family and non-family firms and their governing body were set. Descriptive statistics were calculated, and t-tests and Kruskal–Wallis test for confirmation of set hypothesis were used.

Findings

Sales volume and production consumption results are used as variables, which were compared between family and non-family firms to achieve the most relevant possible conclusions. Based on our results, it can be stated that differences between personnel costs, which, in this study, comprise employee wages, are not statistically significant in the largest Czech family firms. There are significant differences in personnel costs for company boards. In comparing employee numbers and the number of members of statutory bodies, however, no significant difference was ascertained.

Originality/value

This study responds to a gap in the literature, by exploring the differences between personnel costs (for employees and governing body) in the area of the Czech Republic. This study also contributes to the understanding of the remuneration within family firms, by assessing the role of executive remuneration in family firms.

Details

Journal of Family Business Management, vol. 10 no. 3
Type: Research Article
ISSN: 2043-6238

Keywords

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Article

Adrian Pryce, Nada K. Kakabadse and Tom Lloyd

This paper seeks to make the case for new research into the perceived fairness and impact of executive pay.

Abstract

Purpose

This paper seeks to make the case for new research into the perceived fairness and impact of executive pay.

Design/methodology/approach

The paper reviews the literature regarding executive compensation and corporate performance and examines the evidence that a more egalitarian approach to pay could be justified in terms of long‐term shareholder value.

Findings

There would appear to be no evidence to suggest that the growing gap between the pay of executives and that of the average employee generates long‐term enterprise value, and it may even be detrimental to firms, if not the liberal capitalist consensus on which the corporate licence to operate is based.

Research limitations/implications

The paper outlines a new approach to tracking income differentials with corporate performance through the development of a corporate Gini coefficient “league table”.

Social implications

The proposed research is expected to point towards better practice in executive remuneration, and support the growing momentum for a sustainable and enlightened approach to business, in which the key goal is long‐term enterprise value based on a fair distribution of the rewards of business.

Originality/value

In producing a deeper understanding of the impact of widening income differentials, the paper should be of interest to senior executives in publicly quoted companies as well as press commentators, government officials and academics.

Details

Corporate Governance: The international journal of business in society, vol. 11 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

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Abstract

Details

The Theory and Practice of Directors’ Remuneration
Type: Book
ISBN: 978-1-78560-683-0

Abstract

Details

The Theory and Practice of Directors’ Remuneration
Type: Book
ISBN: 978-1-78560-683-0

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Article

Chrispas Nyombi

This paper aims to explore the role corporate personality has played in the battle between executive remuneration and fairness, which is linked to rewarding performance…

Abstract

Purpose

This paper aims to explore the role corporate personality has played in the battle between executive remuneration and fairness, which is linked to rewarding performance. This paper also aims to explore some of the policy measures taken by the UK Government to curb excessive remuneration especially in the banking sector.

Design/methodology/approach

This paper employs an analytical approach. An analytical approach relies on the collection of new information upon which to base any conclusions. The research supports the arguments being made in the paper.

Findings

The paper shows how the ruling in Salomon, over a century ago, that cemented corporate personality and limited liability in the UK, is hampering many of the measures aimed at rewarding performance and promoting fairness in relation to executive remuneration.

Originality/value

Limited research has been done on executive remuneration. Since executive pay has recently hit the media agenda, this paper purports to tackle a current and ongoing issue.

Details

International Journal of Law and Management, vol. 56 no. 3
Type: Research Article
ISSN: 1754-243X

Keywords

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Article

Christopher Pass

UK plcs use option schemes and increasingly long‐term incentive plans (LTIP’s) to reward their executive directors in order to improve corporate performance and align…

Abstract

UK plcs use option schemes and increasingly long‐term incentive plans (LTIP’s) to reward their executive directors in order to improve corporate performance and align their interests more closely with those of the shareholders of the company. This paper presents a study of the option and LTIP arrangements used by a sample of 51 large UK companies over the period 1994‐2001. The general finding is that a substantial proportion of the schemes are “undemanding” rewarding average rather than exceptional performance.

Details

Corporate Governance: The international journal of business in society, vol. 3 no. 4
Type: Research Article
ISSN: 1472-0701

Keywords

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