Article Abstract:
Growing public criticism of the compensation packages given to the top executives of publicly held UK companies has led to calls for improved corporate governance through the appointment of more non-executive directors and the establishment of remuneration committees that could independently evaluate executive pay packages. A survey of 220 large publicly held UK companies reveals that 30% have already established remuneration committees. However, an analysis of pay packages given by these firms shows that these remuneration committees tend to increase top executive pay by a margin of 18% over that of executives at companies that do not have such committees. This disturbing pattern has been traced to the failure to appoint non-executive directors who place shareholder interests above those of the CEOs that they report to on the company's board.
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Article Abstract:
Work is defined as labor providing an individual with his or her regular means of livelihood. Standards used to better understand the value of work include: skills, seniority, performance and productivity. Conflicts that may arise in placing a value on work include union and employer pressures. Legislative and political pressures may also interfere. An organization is best served by a compensation plan that values work. This enables an organization to better recruit, retain and motivate its workforce. Evaluation criteria must be carefully thought out and be free from bias. To be most effective, both employers and employees should be allowed input into the design of the evaluation system.
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Article Abstract:
Decisions on whether to obtain shareholder approval for performance-based compensation and other plans should be based on the business judgment rule. Specifically, companies which face the probability of higher business expenses due to the Sec. 162(m) of the 1993 Omnibus Budget Reconciliation Act provision to eliminate tax deductions for executives which received more than $1 million a year do not indulge in corporate waste even if they forego shareholder approval as long as they exercise the business judgment rule.
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