Corporate Governance and Directors’ Remuneration: Views from the Top

Abstract

This article summarises the views of 342 company chairmen at London‐listed companies of all sizes on issues of corporate governance and directors’ remuneration. In the wake of the Hampel Committee Report, the authors used a fax survey to canvass their views on a range of topics including accountability, business prosperity, rewarding non‐executives and relations with shareholders. The results of the survey suggest company chairmen are deeply divided on most of these important issues: the authors suggest that policy‐makers are right to stick to basic principles rather than detailed prescriptions – and to tread carefully in this minefield. Like the Hampel Committee itself, many company chairman think that the pendulum of regulatory concern may have swung too far in the direction of accountability, to the detriment of company prosperity. Nearly half also thought that increased disclosure requirements had had the effect of ratcheting up directors’ pay, rather than moderating increases. The use of external advisors and pay surveys are prevalent – universal in large companies – and the survey chronicles the way in which they are used.