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Directors Pay Regulation: One Goal Two Approaches

Research output: Contribution to journalArticle

Documents

  • Ernestine Gheyoh Ndzi
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Original languageEnglish
Pages (from-to)337-352
Number of pages16
JournalInternational Journal of Law and Management
Volume58
Issue3
DOIs
Publication statusPublished - 9 May 2016

Abstract

Purpose
This paper aims to examine the two different approaches adopted in the UK to regulate directors’ remuneration. The paper also aims to explore the two approaches to understand which one better regulates directors’ pay and why. It provides an account of the two approaches’ evolution, effectiveness and challenges towards the regulation of directors’ remuneration. The paper will also make some recommendations on both approaches and the way forward to better regulate directors’ remuneration.

Design/methodology/approach
The paper reviews various corporate governance codes, its recommendations on directors’ remuneration, its effectiveness and the challenges it face in regulating directors’ remuneration. The paper also reviews provisions of the Companies Act 2006 on directors’ remuneration, its effectiveness and challenges faced.

Findings
The 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 grey areas and lack of enforcement procedure poses a challenge on 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/value
The 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 which approach could regulate directors pay better and its challenges. The paper further makes recommendations on how the regulation of directors’ remuneration can be effective in the UK.

Notes

This document is the Accepted Manuscript version of the following article: Ernestine Ndzi, ‘Director’s pay regulation: “one goal two approaches”, International Journal of Law and Management, Vol. 58 (3): 337-352, May 2016. The final, published version is available online at doi: https://doi.org/10.1108/IJLMA-07-2015-0034. Content in the UH Research Archive is made available for personal research, educational, and non-commercial purposes only. Unless otherwise stated, all content is protected by copyright, and in the absence of an open license, permissions for further re-use should be sought from the publisher, the author, or other copyright holder.

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