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Author: Guido Ferrarini Publisher: ISBN: Category : Languages : en Pages : 55
Book Description
In this chapter, we analyse current trends in the regulation and practice of executive remuneration. No doubt, the role of regulation in this area is on the rise, particularly after the recent financial crisis, and the standards as to pay governance and structures are spreading from the financial sector to the non-financial one. As a consequence, today's remuneration practices are shaped not only by the need to reduce managerial agency costs at listed companies through appropriate incentives, but also by the hard and soft laws tackling corporate governance and remuneration structures. Moreover, regulation also responds to social issues and political pressures, reflecting concerns about either inequality in the distribution of wealth or incentives to undertake “excessive” risks in the financial sector. We examine, in particular, the main policy questions concerning incentive pay, including the optimal design of stock options and the importance of longterm pay. Amongst the governance mechanisms, we consider both the role of boards and independent directors, and that of shareholders under say on pay rules, taking into account the rise of shareholder engagement in listed companies across the Atlantic. We also analyse regulatory developments in Europe over the last decade and current postcrisis proposals by the Commission, comparing the same with developments at member state level and in the US. In particular, we highlight the impact of say on pay rules on shareholder activism, expanding on the role of proxy advisors and the behaviour of large institutional investors. We lastly focus on the regulation of pay structures, showing that long-term incentives are clearly favoured for both financial and non-financial companies by either regulators or institutional investors. However, financial institutions are the main target of post-crisis reforms, firstly at international level and secondly in the US and the EU, where the FSB principles have been implemented along partially diverging routes. CRD IV, in particular, has marked a new trend in the regulation of bankers' pay, by imposing a bonus cap that we criticize from an economic perspective and which clearly goes beyond the international principles.
Author: Guido Ferrarini Publisher: ISBN: Category : Languages : en Pages : 55
Book Description
In this chapter, we analyse current trends in the regulation and practice of executive remuneration. No doubt, the role of regulation in this area is on the rise, particularly after the recent financial crisis, and the standards as to pay governance and structures are spreading from the financial sector to the non-financial one. As a consequence, today's remuneration practices are shaped not only by the need to reduce managerial agency costs at listed companies through appropriate incentives, but also by the hard and soft laws tackling corporate governance and remuneration structures. Moreover, regulation also responds to social issues and political pressures, reflecting concerns about either inequality in the distribution of wealth or incentives to undertake “excessive” risks in the financial sector. We examine, in particular, the main policy questions concerning incentive pay, including the optimal design of stock options and the importance of longterm pay. Amongst the governance mechanisms, we consider both the role of boards and independent directors, and that of shareholders under say on pay rules, taking into account the rise of shareholder engagement in listed companies across the Atlantic. We also analyse regulatory developments in Europe over the last decade and current postcrisis proposals by the Commission, comparing the same with developments at member state level and in the US. In particular, we highlight the impact of say on pay rules on shareholder activism, expanding on the role of proxy advisors and the behaviour of large institutional investors. We lastly focus on the regulation of pay structures, showing that long-term incentives are clearly favoured for both financial and non-financial companies by either regulators or institutional investors. However, financial institutions are the main target of post-crisis reforms, firstly at international level and secondly in the US and the EU, where the FSB principles have been implemented along partially diverging routes. CRD IV, in particular, has marked a new trend in the regulation of bankers' pay, by imposing a bonus cap that we criticize from an economic perspective and which clearly goes beyond the international principles.
Author: Christoph van der Elst Publisher: Aspen Publishers ISBN: 9789041156075 Category : Law Languages : en Pages : 0
Book Description
è^-Attitudeè^-- looms large in any discussion of executive compensation. Yet here is a book that restricts its remit to what can actually be discovered about the corporate and contractual facts, figures, and rationales that determine how much a company director è^-earnsè^-- in an increasingly complex system of executive remuneration that seems to be taking root worldwide. In a remarkably insightful collection of articles, legal scholars from ten different countries address the state of the art of executive service contracts in twelve different jurisdictions, as diverse as (on the one hand) the European Union, its central Member States and the United States, and (on the other) Iceland and Romania. Their analysis penetrates beyond the often vague regulatory framework to actual survey figures, consultantsè^-- reports, and even data from a number of specific firms.
Author: Simon Staude Publisher: GRIN Verlag ISBN: 3668043132 Category : Business & Economics Languages : en Pages : 32
Book Description
Seminar paper from the year 2014 in the subject Business economics - Investment and Finance, , language: English, abstract: The justification of a company having a remuneration committee (hereinafter “RemCo”) is simple and based on the “agency theory” whereby directors are employed to act as proxies for shareholders and manage a companies’ business on their behalf. However, their powers allow them to manage the business in a manner, which facilitates their own interests. Excessive remuneration and bonus schemes are probably the most controversial outcomes which may be considered as a result of this principle. The UK Corporate Governance Code (hereinafter “the Code”) has tried to deal with this issue, providing principles to establish an appropriate level of remuneration for directors and to align this remuneration with the interest of the shareholders. However, the salaries of CEOs of FTSE100 companies have increased significantly over the last ten years. This is supported by a recent Manifest survey which shows that FTSE100 RemCos still grant remuneration packages above the inflation rate and the average pay increase of employees. As the level of remuneration has increased considerably in recent years, it is indeed questionable whether multi-million salaries for directors can be justified when taking into account economic or fairness reasons and whether RemCos undertake their responsibilities properly. As well as providing the theoretical and legal background and the rationale behind the establishment of RemCos Section 1 of this essay questions the level of remuneration and assesses, whether it can be justified on economic or fairness grounds. Whereas Section 2 shows that the RemCos are not solely responsible for the ratcheting up of executive payments since external factors such as pay consultants influence the remuneration design. The essay demonstrates that the current way RemCos undertake their responsibilities raise major concerns and leaves room for improvement. Section 3 evaluates the recent reforms, such as enhanced disclosure requirements related to the role of remuneration consultants and suggests that these reforms are the first step in the right direction to re-balance executive remuneration but will also show that the execution of these reforms can be considered as rather poor and will have little effect. The essay concludes finally that remuneration committees are only partly responsible for increasing remuneration levels and that further reforms are still necessary.
Author: Tito Boeri Publisher: Fondazione Rodolfo Debendetti ISBN: 0199669805 Category : Business & Economics Languages : en Pages : 311
Book Description
The compensation packages of a growing proportion of firms include pay schemes that are linked to employee or company performance, yet little is known about the patterns of performance related pay. This book compares US and European CEOs to investigate the evolution of executive compensation, its controversies, and its resulting regulations.
Author: Changzheng Zhang Publisher: Nova Science Publishers ISBN: 9781634846806 Category : Business & Economics Languages : en Pages : 225
Book Description
Facing with the ever increasing change of the business environment, the firms have recognized that their persistent competitive edge increasingly depends on whether or not they own the dedicated, experienced and capable CEOs. In the global practice, more and more firms have tried, or are trying, or will try to change their CEOs in order to get higher firm performance or just to get out of recession. Especially it is true in China. However, in theory, the literature in the related fields, such as the corporate governance, the strategic human resource management, the strategy management, the principal-agent theory and so on, has only addressed how to arrange managerial discretion and executive compensation reasonably under the normal circumstances, while ignoring the conditions of CEO change. Therefore, each stakeholder in the post-CEO change period has no clear theoretical guidances on how to reallocate managerial discretion and reset executive compensation for the fresh CEOs. Such a theoretical research gap has leaded to a large number of failures in the issue of CEO change. In order to make up this gap, this book tries to investigate the relationship between managerial discretion and executive compensation under the conditions of CEO change, which can not only practically guide the re-balancing of the corporate governance and further improve the success possibility of CEO change, but can theoretically enrich the contributions in managerial discretion approach and executive compensation theory. Based on the comparative study perspective, by drawing on the data from Chinese listed companies as the sample and adopting the Correlation Analysis, Multiple Linear Regression and Hierarchical Models as the statistical analysis methods, the book investigates how managerial discretion, respectively for the fresh CEOs and the senior CEOs, manipulates each dimension of executive compensation, i.e. executive compensation level, CEO pay-performance sensitivity, executive compensation gap and executive-employee compensation gap. The book makes two valuable new findings: First, the book confirms that both the fresh CEOs and the senior CEOs have the motives and capabilities to manipulate each dimension of executive compensation, but varying by intent and intention; Second, the book proves that the fresh CEOs show higher firm-serving motives when they manipulate each dimension of executive compensation by performing managerial discretion, while the senior CEOs show relatively higher self-serving motives. Based on the research results, the book builds the fresh-keeping mechanisms of firm-serving motives of the fresh CEOs during their whole CEO tenure, which are of great meanings for the government, the scholars and the practitioners and so on.
Author: Steven Balsam Publisher: Academic Press ISBN: 9780120771264 Category : Business & Economics Languages : en Pages : 410
Book Description
General readers have no idea why people should care about what executives are paid and why they are paid the way they are. That's the reason that The Wall Street Journal, Fortune, Forbes, and other popular and practitioner publications have regular coverage on them. This book not only proposes a reason - executives need incentives in order to maximize firm value (economists call this agency theory) - it also describes the nature and design of executive compensation practices. Those incentives can take the form of benefits (salary, stock options), or prerquisites (reflecting the status of the executive within the organizational culture.
Author: Christos Boras Publisher: GRIN Verlag ISBN: 3668918686 Category : Business & Economics Languages : en Pages : 74
Book Description
Doctoral Thesis / Dissertation from the year 2014 in the subject Business economics - Business Management, Corporate Governance, grade: 72%, Aston University (Business School), course: MSc in Accounting and Finance, language: English, abstract: This report provides an analysis and evaluation over the executive remuneration issues. The basic issues in this report raised the public debate and the academic literature findings over the misalignment between the pay and performance and the level of executives’ emoluments. In order to provide a more specific and practical perspective of the issues raised, this project used a case study of Tate & Lyle plc. and its main competitor Associated British Foods plc. Methods of analysis include the review over the UK corporate governance evolution on executive remuneration matters. The second part of the review is based on the academic literature review. Furthermore, the internal structure of both companies and the level of salaries in the hierarchy give an explanation over the level of the executive emoluments. Moreover, the structure of the executive remuneration is approved in both companies by the majority of the shareholders and there is evidence that the short-term and long-term performance of the companies have an important effect on executives’ salary. Last but not least, there is evidence that the executive remuneration is almost the same across the same industry even if the performance between two companies is different. The report finds that both companies are in line with UK corporate governance code guidelines and aligned pay with performance. However, there are not adequate case studies through different industries in order to have a more precise information over the relationship between pay and performance of other companies. The major area of weakness on the academic literature is the lack of case studies which can provide more detailed information of practical implementations of the Code and academic literature. Moreover, the institutions and most of the academic research is based on using average figures based on the FTSE100, FTSE250 and FTSE350 Indexes. The report also investigates the fact that the analysis conducted has limitations. Some of the limitations include the lack of ABF’s annual report for 2014. In order to overpass this difficulty, this project used the annual report of 2013 for both companies. Another limitation was the lack of case studies over the executive remuneration issues based on certain companies rather than the average trend of an Index. Last but not least, there was no other case study of a company over the executive remuneration issues in order to use the methodology.
Author: Frederick D. Lipman Publisher: John Wiley & Sons ISBN: 9780470283035 Category : Business & Economics Languages : en Pages : 336
Book Description
Executive Compensation Best Practices demystifies the topic of executive compensation, with a hands-on guide providing comprehensive compensation guidance for all members of the board. Essential reading for board members, CEOs, and senior human resources leaders from companies of every size, this book is the most authoritative reference on executive compensation.
Author: Guido Ferrarini
Author: Guido Ferrarini
Author: Christoph van der Elst
Author: Simon Staude
Author: Tito Boeri
Author: Changzheng Zhang
Author: Arthur Kohn
Author: Arthur H. Kohn
Author: Steven Balsam
Author: Christos Boras
Author: Frederick D. Lipman