Executive Remuneration in Crisis: A Critical Assessment of Reforms in Europe

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Abstract:

This article considers the regulation "on the books" of executive pay across the EU and the evidence "in action" on corporate practice concerning executive pay (based on disclosures by FTSE Eurofirst 300 companies) in relation to the best practice recommendations set out in two key Commission Recommendations from 2004 and 2005. It finds that Member State implementation of the two Recommendations has been patchy and, in particular, that reliance on Corporate Governance Codes has not resulted in the embedding of good practices, particularly with respect to disclosure concerning executive pay, across Europe's largest companies. It argues that if the EU is to succeed in promoting stronger alignment between shareholder and manager interests by means of the executive pay contract, closer attention is needed to remuneration governance and that a mandatory, harmonised disclosure obligation should be introduced. Although the Commission has recently adopted a 2009 Recommendation on executive pay in the corporate sector generally as part of its response to the financial crisis, the article suggests that this attempt to influence the design of executive pay is misconceived and that attention would have been better focused on the enforcement of basic disclosure obligations.

Document Type: Research Article

Publication date: April 1, 2010

More about this publication?
  • The Journal of Corporate Law Studies provides a forum for scholarship on corporate, securities and financial law broadly construed. Thus the Journal publishes articles on subjects as diverse as insolvency and the commercial conflict of laws, in addition to mainstream topics such as directors' duties and financial regulation. The Journal also embraces interdisciplinary work and work in cognate fields.Articles published in the Journal are subject to rigorous peer review. Shorter articles and notes are refereed where appropriate.
    The Journal is published twice a year in June and October.
    The journal will be of interest to academics and practitioners specialising in any of the subjects covered, and also to those with an interest in the strategic direction of the law and the influences which affect it - thus regulators, law and policy-makers, and the judiciary.
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