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Why are the fat cats still purring?

Why are the fat cats still purring? PurposeThe paper examines two different approaches adopted in the UK to regulate directors’ remuneration. The aim is to explore the approaches to understand which one better regulates directors’ pay and why. It provides an account of the approaches’ evolution, effectiveness and challenges toward the regulation of directors’ remuneration.Design/methodology/approachThe paper reviews various corporate governance codes, their recommendations on directors’ remuneration, their effectiveness and the challenges of regulating directors’ remuneration. The paper also reviews provisions of the Companies Act 2006.FindingsThe 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 gray areas and lack of enforcement procedure poses a challenge to 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/valueThe 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 considers which approach could regulate directors pay better and its challenges. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Human Resource Managementinternational Digest Emerald Publishing

Why are the fat cats still purring?

Human Resource Managementinternational Digest , Volume 24 (6): 3 – Aug 8, 2016

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0967-0734
DOI
10.1108/HRMID-05-2016-0074
Publisher site
See Article on Publisher Site

Abstract

PurposeThe paper examines two different approaches adopted in the UK to regulate directors’ remuneration. The aim is to explore the approaches to understand which one better regulates directors’ pay and why. It provides an account of the approaches’ evolution, effectiveness and challenges toward the regulation of directors’ remuneration.Design/methodology/approachThe paper reviews various corporate governance codes, their recommendations on directors’ remuneration, their effectiveness and the challenges of regulating directors’ remuneration. The paper also reviews provisions of the Companies Act 2006.FindingsThe 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 gray areas and lack of enforcement procedure poses a challenge to 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/valueThe 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 considers which approach could regulate directors pay better and its challenges.

Journal

Human Resource Managementinternational DigestEmerald Publishing

Published: Aug 8, 2016

References