The Controversy of Executive Remuneration: Pay Ratios and Other Approaches

Abstract

The regulation of executive pay needs a radical rethinking. Due to the current emphasis on the consequences of the pandemic on companies, and the calls for fairer pay designs, increased scrutiny of pay, pay gap reporting and accompanying narratives is inevitable. Adopting a clear policy on pay can prove a solid tool in promoting positive perceptions and encouraging a persuasive response to any adverse scrutiny of pay issues. Yet, regulating executive pay is a balancing act. Societies and the law must preserve companies’ freedom to decide their own executives’ pay whilst safeguarding fairness within pay structures. Clearly, in making laws on executive pay, governments in western economies must accommodate for many conflicting policy views and variables: whether to allow company boards to exercise their powers of management free of (further) government limitation, or to extend regulation in order to tackle the general public’s concern over executive greed and unethical pay structures. Criminal and civil enforcement, Fraud, Game theory, HMRC, Tax returns.