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Payal - One of the best experts on this subject based on the ideXlab platform.
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Independence of Remuneration Committee & Executive Remuneration in India
The Indian Journal of Industrial Relations, 2016Co-Authors: Lakhwinder Singh Kang, PayalAbstract:The present study explores the impact of independence of Remuneration committee on the Remuneration of executive directors in a sample of 51 listed companies in India for a period from 2003 to 2012. In companies having fully independent Remuneration committees and independent chairmen, a negative impact of accounting performance has been found on the executive Remuneration. However, results reveal a positive and significant impact of market performance on the executive Remuneration. In the presence of an independent chairman of Remuneration committee, promoters' shareholding has been observed negatively related with the executive Remuneration. These findings can be useful for the regulatory authorities in framing and improving norms regarding the determination of executive Remuneration. Introduction The debate about executive Remuneration has focused on three elements: structure, governance and disclosure (Ferrarini et al., 2003). Any governance mechanism designed to regulate executive Remuneration should ensure the coverage of all these elements. The regulation should increase the possibility that the Remuneration setting maximizes shareholder interests and does not become a skimming process in which the board is captured by management. In Anglo-American corporate governance, two devices have been developed to reduce the risk of a board's capture: the appointment of independent directors to the board and the creation of a Remuneration committee consisting of non-executive/independent directors (Ferrarini et al., 2003). For efficient regulation, corporate governance codes have been introduced by almost all the countries in the recent past. For instance, the Combined Code on Corporate Governance, 2003 (UK); NYSE Listing Standards, 2004 (USA); Code of Corporate Governance, 2005 (Singapore); and Since 2003, ASX Corporate Governance Council (Australia) have been developing and re leasing recommendations on the corporate governance practices to be adopted by the listed entities. In its effort to match with international best practices and improve the effectiveness of corporate boards and its committees, the Securities and Exchange Board of India (SEBI) has also introduced regulations. Since the notification of the Clause 49 on February 21, 2000, corporate governance regulations in India have rapidly evolved. Following the enactment of the Companies Act, 2013, the updated version of CL49 was notified on April 17, 2014. Based on the industry response, some provisions in CL49 were amended and the SEBI (Listing Obligations & Disclosure Requirements) Regulations were notified on September 2, 2015 (Sarkar, 2015). Clause 49 states that the board may set up a Remuneration committee to determine on their behalf and on behalf of the shareholders with agreed terms of reference, the company's policy on specific Remuneration packages for executive directors including pension rights and any compensation payment. The formation of Remuneration committee was non-mandatory till 2013, but the Companies Act 2013 made it mandatory to have nomination and Remuneration committee consisting of three or more non-executive directors, out of which not less than one-half shall be independent directors. As the Remuneration committee is responsible for fixation of Remuneration of the executive directors, it is important to examine the role of Remuneration committee in setting pay of directors. The present paper attempts to examine the impact of independence of Remuneration committee in determining the Remuneration of executive directors of the listed companies in India. It also studies how the independence of Remuneration committee affects the relationship of company performance, promoters' shareholding, and ownership concentration with the executive Remuneration. Review of Literature The impact of presence or absence of the Remuneration committee on the pay packages of CEOs and directors has been examined by only a few researchers. …
Ernestine Gheyoh Ndzi - One of the best experts on this subject based on the ideXlab platform.
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Executive Remuneration: the power and dominance of human greed
Journal of Financial Crime, 2019Co-Authors: Ernestine Gheyoh NdziAbstract:The paper aims to examine the role of human greed in the determination of executive Remuneration in the UK.,The paper reviews the past and existing regulation and corporate governance recommendations on executive Remuneration.,The paper demonstrates that the failure of regulatory mechanisms to curb excessive executive Remuneration can be justified on the grounds of human greed. Greed is facilitated by the potential conflict of interest that exists as a result of the executives’ position in the company. The position of the law has given greed the opportunity to manifest, making it quite difficult for executive Remuneration to be effectively regulated.,The paper adds to the existing debate on excessive executive Remuneration by demonstrating that human greed is the basis of excessive executive Remuneration on which limited literature exists.
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The impact of the Salomon principle on directors’ Remuneration in the UK
International Journal of Law and Management, 2017Co-Authors: Ernestine Gheyoh NdziAbstract:Purpose This paper aims to examine the Salomon principle of separate legal personality and its impact on the regulation of directors’ Remuneration in the UK. The aim of the paper is to explore the Salomon principle to determine whether it serves as a driving factor for directors’ Remuneration levels. The paper will also examine the restrictive approach of the courts to move away from the principle and their reluctance to get involved in directors’ Remuneration issues of a company. The paper explains the Salomon principle, describes the nature of the problem on directors’ Remuneration and provides an analysis on how the Salomon principle impacts on the directors’ Remuneration. Design/methodology/approach The paper reviews case law, statutory provisions and academic opinions on the directors’ Remuneration and the concept of separate legal entity. The paper critically reviews the impact of the concept of separate entity on directors’ Remuneration. Findings The paper finds that the courts are reluctant to come away from the concept of separate legal personality as well as reluctant to get involved with directors’ Remuneration. This reluctance of the court makes the concept of separate legal personality to act as one of the drivers of directors’ Remuneration. Originality/value The paper offers a different explanation into why directors’ Remuneration continuous to be an issue in the UK. It points out that the concept of separate legal personality is a potential driver of directors’ Remuneration in the UK.
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Remuneration consultants: benchmarking and its effect on pay
International Journal of Law and Management, 2015Co-Authors: Ernestine Gheyoh NdziAbstract:Purpose – The purpose of this paper is to investigate the factors that Remuneration consultants consider when selecting comparator groups for executive Remuneration benchmarking. It explores how the different factors influence the level of pay and whether the factors encourage pay-for-performance. Furthermore, it investigates whether the factors used form part of the reasons why Remuneration consultants have been criticised to be correlated with high executive pay. Design/methodology/approach – This paper analysis the data obtained from interviewing Remuneration consultants from prominent consultancy firms that operate in the UK and the USA. Findings – This paper demonstrates that there is no uniformity in the factors used by Remuneration consultants when selecting comparator groups for executive Remuneration benchmarking. The paper shows that company performance is not a major factor considered justifying why executive pay is not linked to company performance. The paper further demonstrates that the fact...
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Remuneration consultants’ advice and its effect on pay
International Journal of Law and Management, 2015Co-Authors: Ernestine Gheyoh NdziAbstract:Purpose – The purpose of this paper is to investigate the nature of advice that the Remuneration consultants offer to the companies on executive pay. It explores how the advice offered affects the level of executive Remuneration. Furthermore, it investigates whether the nature of advice offered forms part of the reasons why Remuneration consultants have been criticised to be correlated with high executive pay. Design/methodology/approach – This paper analysis the data obtained from interviewing Remuneration consultants from prominent consultancy firms that operate in the UK and the USA. Findings – This paper demonstrates that Remuneration consultants’ advice on executive Remuneration is not always objective. The nature of advice depends on whether the consultants have a balance of portfolio of companies (self-interest) or whether they have the courage to stand up to confrontations from the executives (fear of executives). This study shows that the purpose of using Remuneration consultants in advising on e...
Lakhwinder Singh Kang - One of the best experts on this subject based on the ideXlab platform.
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What determines the disclosure of managerial Remuneration in India
Journal of Financial Reporting and Accounting, 2018Co-Authors: Lakhwinder Singh Kang, Payal NandaAbstract:Purpose This study aims to analyse the impact of company performance, company size, ownership structure, board characteristics and other company characteristics on the disclosure of managerial Remuneration in 134 listed companies in India from the year 2003 to 2012. Design/methodology/approach A disclosure and compliance index is developed on the basis of 14 statements prepared regarding the disclosure of managerial Remuneration in corporate governance reports of companies. The Papke and Wooldridge (2008) approach is adopted to estimate fractional response models, and fractional probit model is estimated using the generalised estimating equation approach, with an independent working correlation matrix to determine the effect of various company attributes on managerial Remuneration disclosure. Findings The study shows that company size and the presence of Remuneration committee are significantly related with the disclosure and compliance index of managerial Remuneration. Remuneration disclosure is found to be time-dependent as time dummies for all years are found to be significant. Research limitations/implications This study highlights the importance of the formation of Remuneration committees on corporate boards. The findings of the present study can be used as inputs for promoting better compliance and comprehensive executive Remuneration disclosure. Originality/value Nothing concrete in the field of managerial Remuneration disclosure (to the best of researcher’s knowledge) has yet been done in an emerging economy such as India. This study aims to address this gap by deriving a disclosure and compliance index for managerial Remuneration disclosure and examining the impact of various corporate attributes on it.
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How is managerial Remuneration determined in India
Journal of Accounting in Emerging Economies, 2017Co-Authors: Lakhwinder Singh Kang, Payal NandaAbstract:Purpose The purpose of this paper is to analyse the impact of company performance, governance structure and ownership structure in determining the managerial Remuneration for 134 listed companies in India over the years 2003-2012. Design/methodology/approach Remuneration paid to the board of directors of companies is taken to represent the managerial Remuneration. Exogeneity among the company performance measures is verified with the endogtest suggested in Baum et al. (2007). A fixed effects panel regression with clustered standard errors is employed after checking for the presence of heteroskedasticity, autocorrelation and cross-sectional dependence in the data. Findings The study reveals that managerial Remuneration increases as the accounting performance of companies improves, whereas the market performance of companies has no significant association with managerial Remuneration. The study also shows that foreign institutional shareholding is significantly and positively related with managerial Remuneration in India. Research limitations/implications This study highlights the various factors which affect the determination of managerial Remuneration in India. These findings can be used as inputs by regulatory authorities in framing and improving governance norms regarding managerial Remuneration. This study also suggests that factors other than the number, the independence and objectivity of independent directors are more important in determining managerial Remuneration. Originality/value The present study proposes more reliable results, obtained through a fixed effects panel regression model with clustered standard error estimates and also checks endogeneity of performance measures with the endogtest, which is the appropriate test to use for verifying endogeneity in panel data.
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Independence of Remuneration Committee & Executive Remuneration in India
The Indian Journal of Industrial Relations, 2016Co-Authors: Lakhwinder Singh Kang, PayalAbstract:The present study explores the impact of independence of Remuneration committee on the Remuneration of executive directors in a sample of 51 listed companies in India for a period from 2003 to 2012. In companies having fully independent Remuneration committees and independent chairmen, a negative impact of accounting performance has been found on the executive Remuneration. However, results reveal a positive and significant impact of market performance on the executive Remuneration. In the presence of an independent chairman of Remuneration committee, promoters' shareholding has been observed negatively related with the executive Remuneration. These findings can be useful for the regulatory authorities in framing and improving norms regarding the determination of executive Remuneration. Introduction The debate about executive Remuneration has focused on three elements: structure, governance and disclosure (Ferrarini et al., 2003). Any governance mechanism designed to regulate executive Remuneration should ensure the coverage of all these elements. The regulation should increase the possibility that the Remuneration setting maximizes shareholder interests and does not become a skimming process in which the board is captured by management. In Anglo-American corporate governance, two devices have been developed to reduce the risk of a board's capture: the appointment of independent directors to the board and the creation of a Remuneration committee consisting of non-executive/independent directors (Ferrarini et al., 2003). For efficient regulation, corporate governance codes have been introduced by almost all the countries in the recent past. For instance, the Combined Code on Corporate Governance, 2003 (UK); NYSE Listing Standards, 2004 (USA); Code of Corporate Governance, 2005 (Singapore); and Since 2003, ASX Corporate Governance Council (Australia) have been developing and re leasing recommendations on the corporate governance practices to be adopted by the listed entities. In its effort to match with international best practices and improve the effectiveness of corporate boards and its committees, the Securities and Exchange Board of India (SEBI) has also introduced regulations. Since the notification of the Clause 49 on February 21, 2000, corporate governance regulations in India have rapidly evolved. Following the enactment of the Companies Act, 2013, the updated version of CL49 was notified on April 17, 2014. Based on the industry response, some provisions in CL49 were amended and the SEBI (Listing Obligations & Disclosure Requirements) Regulations were notified on September 2, 2015 (Sarkar, 2015). Clause 49 states that the board may set up a Remuneration committee to determine on their behalf and on behalf of the shareholders with agreed terms of reference, the company's policy on specific Remuneration packages for executive directors including pension rights and any compensation payment. The formation of Remuneration committee was non-mandatory till 2013, but the Companies Act 2013 made it mandatory to have nomination and Remuneration committee consisting of three or more non-executive directors, out of which not less than one-half shall be independent directors. As the Remuneration committee is responsible for fixation of Remuneration of the executive directors, it is important to examine the role of Remuneration committee in setting pay of directors. The present paper attempts to examine the impact of independence of Remuneration committee in determining the Remuneration of executive directors of the listed companies in India. It also studies how the independence of Remuneration committee affects the relationship of company performance, promoters' shareholding, and ownership concentration with the executive Remuneration. Review of Literature The impact of presence or absence of the Remuneration committee on the pay packages of CEOs and directors has been examined by only a few researchers. …
Vela Madlela - One of the best experts on this subject based on the ideXlab platform.
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disclosure of directors Remuneration under south african company law is it adequate
South African Law Journal, 2017Co-Authors: Rehana Cassim, Vela MadlelaAbstract:The Remuneration of directors is a controversial issue in many jurisdictions in the light of the global financial crisis and the escalating Remuneration packages of directors. One way of managing the escalating levels of directors’ Remuneration is to compel companies to disclose the details of directors’ Remuneration packages. Full disclosure of the Remuneration of directors would increase transparency and accountability in the Remuneration-setting process of directors. This article explores the adequacy of the Companies Act 71 of 2008 in relation to the disclosure of directors’ Remuneration. It further examines the disclosure requirements of directors’ Remuneration under the JSE Listings Requirements and the King Report on Governance for South Africa, 2016 (‘King IV’). It compares South Africa’s Remuneration disclosure requirements with the legislative standards for Remuneration disclosure under the Companies Act 2006 of the United Kingdom, and examines whether our disclosure requirements meet the standards of the UK Companies Act, 2006. This article concludes that the minimum standards of Remuneration disclosure set by the Companies Act are too low to satisfy enhanced transparency, and suggests various proposals for strengthening the disclosure requirements of directors’ Remuneration under the Companies Act.
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The regulation of executive Remuneration in South Africa
2016Co-Authors: Vela Madlela, Palollo Michael LehloenyaAbstract:Executive Remuneration is one of the essential aspects of corporate governance that has attracted increasing attention in corporate circles and beyond in recent years. This comes in the wake of the global financial crisis of 2008 and the executive Remuneration packages that are spiraling out of control. The increasingly excessive payments companies and financial institutions make to their management teams have given rise to growing consensus that executive Remuneration needs to be controlled and regulated. Included among the identified causes of the problem are inter alia lack of transparency and accountability in determining executive Remuneration, conflict of interests among those who determine executive Remuneration, misalignment of management and shareholder interests, as well as inadequate protection of shareholder governance rights. The primary object of this paper is to examine the adequacy of the current regulatory framework in South Africa in addressing the challenges relating to executive Remuneration. It further takes cognisance of the need for companies to achieve an appropriate balance between adequate regulation and the necessary flexibility in responding to the needs of different companies. The paper also makes proposals for reforming the current regulatory framework in a way that promotes fairness, transparency and accountability in executive Remuneration.
Steven Simoens - One of the best experts on this subject based on the ideXlab platform.
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a comparative analysis of Remuneration models for pharmaceutical professional services
Health Policy, 2010Co-Authors: Cecilia Bernsten, Karolina Andersson, Yves Gariepy, Steven SimoensAbstract:Abstract Objectives Pharmacists provide a wide range of professional services to support the appropriate use of medicines by patients. This study aims to conduct an international, comparative analysis of Remuneration models for pharmaceutical professional services. Methods Information about Remuneration models was derived from a literature review and a semi-structured questionnaire completed by experts. Results Remuneration models differ in the way that pharmacists are paid for professional services beyond dispensing medicines. Also, the scope of services that are remunerated varies. The majority of countries regulate Remuneration for services only when the medicine is paid for under the reimbursement scheme. Remuneration of services implies a commitment to assure their quality in some countries. Collaborative practice models have been set up where pharmacists work together with other health care professionals to deliver diagnosis-specific services or services based on the patient's use of medicines. The Remuneration of services is influenced by the value of services, budgetary constraints, the payer perspective, and the attitude of physicians, pharmacists and patients. Conclusions Professional organisations need to formulate a clear strategy for developing and gaining Remuneration for pharmaceutical professional services. This implies that pharmacists not only demonstrate the value of services, but also assure their quality.
