Executive Compensation

Abstract

Inefficient and excessive executive compensation arrangements departing from shareholder value creation have been common in many companies and in some cases have been an element triggering corporate scandals. From a corporate governance perspective we will go through the history, the structure and the legal framework of executive compensation in the US and Germany. The objective is to analyze the US disclosure and independence regulatory approach and review managers pay standpoint, as well as its future and compare it with the German approach. Hence, we will analyze the factors that have shaped executive compensation in both countries. At this point there are still risks and difficulties that market participants and the regulators will need to be overcome to discipline harmful compensation practices. In the joint section we conclude that the regulatory measures that Germany and the US have taken, have allowed differences in compensation amounts.