The regulatory framework of executive remuneration: contribution from shareholder activism and board accountability

Zhao, J. ORCID: 0000-0001-6430-2356 and Li, Z., 2019. The regulatory framework of executive remuneration: contribution from shareholder activism and board accountability. Hastings Business Law Journal, 15 (2), pp. 202-252. ISSN 1554-849X

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Abstract

Executive remuneration is influenced by multiple factors including capital markets, product markets, corporate internal governance, corporate finance, governmental regulation, and legislation. Related to various practical factors, executive remuneration is no longer simply fixed based on the contractual arrangements between companies and their directors. Due to the complicated relationship network in executive remuneration and the way public companies produce their remuneration policies, remuneration structures and levels can be extremely complex and easily affected by undue influence. This paper focuses on how to solve executive remuneration problems through regulation. Legislations from several developed countries in areas such as providing shareholders with more power in voting for a companies’ remuneration plan, increasing board accountability in remuneration design, and putting employee representatives on boards in producing pay plans will be critically analyzed, followed by some reform proposals. This paper examines regulation settings through the lens of a few factors including the relationships between executive pay and shareholder voting power, board accountability, and remuneration design. Observations and proposals will be made, including positive correlations between shareholder intervention in remuneration issues and the company’s long-term productivity, prompting board accountability through more concrete regulatory frameworks, and the narrower emphasis of regulations on remuneration structure and design.

Item Type: Journal article
Publication Title: Hastings Business Law Journal
Creators: Zhao, J. and Li, Z.
Publisher: University of California, San Francisco
Date: 2019
Volume: 15
Number: 2
ISSN: 1554-849X
Divisions: Schools > Nottingham Law School
Depositing User: Jonathan Gallacher
Date Added: 24 Apr 2019 08:41
Last Modified: 03 Sep 2019 15:32
URI: http://irep.ntu.ac.uk/id/eprint/36336

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