Directors’ remuneration has been a contentious issue in the UK since the early 1990s. The Companies Act 2006 gives the shareholders voting rights and highlights the shareholders as responsible for monitoring and curbing directors’ excessive remuneration. However, shareholders have consistently been less active in using their votes to monitor directors’ pay. Shareholders often tend to abstain from resolutions on directors’ remuneration more than they would abstain in other resolution. This article argues that shareholders are not interested/incapable of monitoring directors’ remuneration. Some of the reasons explored in this article share ownership which is mostly in the hands of overseas investors; the complexity of the remuneration package and the technicalities involved in the determination of pay which the shareholder find difficult to understand; and the drivers of directors remuneration. The article recommends that the Companies Act 2006 should make basic provisions on directors’ remuneration because shareholder voting alone is failing.
|Publication status||Published - 2017|
- Director's remuneration
- Shareholder's vote