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The Impact of Corporate Governance Reforms on the Remuneration of Executives in the UK

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  • Steve Thompson

Abstract

Corporate governance reforms have been motivated to a considerable degree by concerns about the possible malfunctioning of the executive remuneration determination process in large firms. It is not clear, however, how effective these reforms have been in altering pay‐setting procedures in the direction of aligning executive and shareholder interests. This paper reviews some initial evidence and suggests that a mixed picture emerges. It appears that reforms have been more successful in reducing executive tenure – and hence pay‐offs in the event of failure – than they have been in linking rewards to performance for continuing executives. It is clear, however, that reforms have facilitated the role for institutional shareholders in approving remuneration packages.

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  • Steve Thompson, 2005. "The Impact of Corporate Governance Reforms on the Remuneration of Executives in the UK," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(1), pages 19-25, January.
    • Handle: RePEc:bla:corgov:v:13:y:2005:i:1:p:19-25
    DOI: 10.1111/j.1467-8683.2005.00400.x
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    References listed on IDEAS

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    1. Wright, Peter & Thompson, Steve & Girma, Sourafel, 2002. "Merger Activity and Executive Pay," CEPR Discussion Papers 3255, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Harvey, Charles & Maclean, Mairi & Price, Michael, 2020. "Executive remuneration and the limits of disclosure as an instrument of corporate governance," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 69(C).
    2. Lee, Janet, 2009. "Executive performance-based remuneration, performance change and board structures," The International Journal of Accounting, Elsevier, vol. 44(2), pages 138-162, June.
    3. James Borthwick & Aelee Jun & Shiguang Ma, 2020. "Changing board behaviour: The role of the ‘Two Strikes’ rule in improving the efficacy of Australian Say‐on‐Pay," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 827-876, April.
    4. Callaghan, Helen, 2013. "Who cares about financialization? Explaining the decline in political salience of active markets for corporate control," MPIfG Discussion Paper 13/4, Max Planck Institute for the Study of Societies.
    5. Yimeng Liang & Robyn Moroney & Michaela Rankin, 2020. "Say‐on‐pay judgements: the two‐strikes rule and the pay‐performance link," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 943-970, April.
    6. Victor-Octavian Müller & Ionel-Alin Ienciu & Carmen Giorgiana Bonaci & Crina Ioana Filip, 2014. "Board Characteristics Best Practices and Financial Performance. Evidence from the European Capital Market," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 16(36), pages 672-672, May.

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