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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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Abstract

Details

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

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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

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

Ernestine Ndzi

This paper aims to examine the Salomon principle of separate legal personality and its impact on the regulation of directors’ remuneration in the UK. The aim of the paper…

Abstract

Purpose

This paper aims to examine the Salomon principle of separate legal personality and its impact on the regulation of directors’ remuneration in the UK. The aim of the paper is to explore the Salomon principle to determine whether it serves as a driving factor for directors’ remuneration levels. The paper will also examine the restrictive approach of the courts to move away from the principle and their reluctance to get involved in directors’ remuneration issues of a company. The paper explains the Salomon principle, describes the nature of the problem on directors’ remuneration and provides an analysis on how the Salomon principle impacts on the directors’ remuneration.

Design/methodology/approach

The paper reviews case law, statutory provisions and academic opinions on the directors’ remuneration and the concept of separate legal entity. The paper critically reviews the impact of the concept of separate entity on directors’ remuneration.

Findings

The paper finds that the courts are reluctant to come away from the concept of separate legal personality as well as reluctant to get involved with directors’ remuneration. This reluctance of the court makes the concept of separate legal personality to act as one of the drivers of directors’ remuneration.

Originality/value

The paper offers a different explanation into why directors’ remuneration continuous to be an issue in the UK. It points out that the concept of separate legal personality is a potential driver of directors’ remuneration in the UK.

Details

International Journal of Law and Management, vol. 59 no. 2
Type: Research Article
ISSN: 1754-243X

Keywords

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Article

Andrew Kakabadse

This article aims to capture latest thinking from an internationally renowned practitioner on the themes of Chairmanship, purpose of the board and governance.

Abstract

Purpose

This article aims to capture latest thinking from an internationally renowned practitioner on the themes of Chairmanship, purpose of the board and governance.

Design/methodology/approach

The author used two methods to complete the article – semi‐structured interview and qualitative methodology

Findings

Critical is the role of Chairman and leading the board. Beyond governance is establishing high quality, resilient and open relationships amongst board members, so that strategic risk and vulnerability issues can be effetively addressed.

Research limitations/implications

The focus was based on one interview only, generalisation is limited.

Practical implications

Provides an insightful view on how a world class Chairman structures and actions his role.

Originality/value

This is a critical original interview emphasising best practice Chairmanship.

Details

Journal of Management Development, vol. 26 no. 4
Type: Research Article
ISSN: 0262-1711

Keywords

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Article

Zahid Riaz

This paper aims to explore an alternative approach to regulation for addressing governance problems relating to director and executive remuneration in publicly listed…

Abstract

Purpose

This paper aims to explore an alternative approach to regulation for addressing governance problems relating to director and executive remuneration in publicly listed firms. The author investigates the development of hybrid regulatory framework, composed of state regulation and self-regulation, for remuneration governance in Australia.

Design/methodology/approach

The synthesis of constructs borrowed from agency and institutional theories and its contextual analysis examines the effectiveness of formal (state regulation) and informal (self-regulation) institutions for the development of a hybrid of regulation. Thereafter, the author examines the impact of hybrid regulation on remuneration disclosure behavior in Australia.

Findings

The author finds that improvement in disclosure is primarily driven by the establishment of remuneration committees and separate role of chief executive officer (CEO) and chairperson but weakened by the presence of CEO at remuneration committee and presence of remuneration consultant.

Originality/value

Global crises have called for greater transparency and protection of investors through state regulation alone. However, corporate governance, being a social practice that is shaped by diverse interests, calls for a holistic approach. A useful contribution of this study is that through an in-depth examination into the stages and actors of the government interventions involving the balancing of tension between conflicting forces, it provides insights for developing an effective regulatory hybrid which has greater acceptance for corporate governance. In conclusion, it implies the significance of priming the social arena through active engagement of diverse market forces prior to introducing state regulation.

Details

Corporate Governance, vol. 16 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

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Article

Russell D. Lansbury and Annabelle Quince

Various aspects of managerial and professional employees in Australia are examined in an attempt to establish if the Australian experience is similar to that reported in…

Abstract

Various aspects of managerial and professional employees in Australia are examined in an attempt to establish if the Australian experience is similar to that reported in other countries where “management” appears to have emerged as a third force between the employers and organised labour. It is argued that the new style manager is a younger, more highly educated “professional” but that the managerial function is also changing. A survey, conducted in Australia during 1985 of senior executives and 14 large scale organisations from both the public and private sector, provides the basis for this report of the changing characteristics of managerial and professional employees in Australia. Areas explored include the proportion of managers and professionals as a percentage of the labour force; particular characteristics which are emerging; education levels and qualifications; the process governing the movement of managers within the labour market; the effect of recent legislation on remuneration systems; and the degree of union membership among managers.

Details

Employee Relations, vol. 10 no. 5
Type: Research Article
ISSN: 0142-5455

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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