Exploring the Remuneration ‘Black Box’: Establishing An Organizational Learning Insight into Changing Remuneration Committee ‘Social Worlds’

Abstract

Current executive compensation research posits a need to extend analysis beyond principalagent theory in order to explore the complex social influences and processes implicated in Remuneration Committee (RemCo) decision-making (e.g. Bender, 2007; Kakabadse et al, 2006; Main et al., 2007), particularly given the current uproar surrounding reported levels and structuring of executive remuneration. We respond to this international need by highlighting how innovative organizational learning theorizing can be integrated into further investigations of the remuneration ‘Black Box’, in order to focus attention upon the nuances of what and how organizational learning takes place in the remuneration process. Additionally, we note the importance of investigating the main actors and particularly their performance of complex roles within their rapidly evolving ‘social worlds’. By exploring the organizational learning phenomena implicated in executive remuneration, we argue that practitioners, regulatory bodies etc. can appreciate further the implications of their respective decision-making.