Corporate Governance and the Problem of Executive Compensation: The International Response to the Compensation Problem (Lessons from the Report of the High Pay Commission)
The Report of the High Pay Commission contained a number of possible warnings, both for companies in Britain and in the United States.
What was clear from the Report was that matters of executive compensation had become an issue of public concern. In other words, the matter was no longer between owners and managers. For the most part, shareholders want to see compensation linked to performance. The amount paid is less significant. With respect to the public, however, the concerns are reversed. The public is less interested in the relationship between performance and compensation and more interested in the escalating amounts.
As the Report of the High Pay Commission shows, once the matter becomes an issue of public debate, the proposed solutions shift. They increasingly focus on efforts to temper the escalation of executive compensation. In other words, they focus on the amount rather than the type of compensation.
In the next few posts, we will examine the reaction of the British Government to the recommendations of the High Pay Commission.