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Purpose – This paper aims to explore the role corporate personality has played in the battle between executive remuneration and fairness, which is linked to rewarding performance. This paper also aims to explore some of the policy measures taken by the UK Government to curb excessive remuneration especially in the banking sector. Design/methodology/approach – This paper employs an analytical approach. An analytical approach relies on the collection of new information upon which to base any conclusions. The research supports the arguments being made in the paper. Findings – The paper shows how the ruling in Salomon, over a century ago, that cemented corporate personality and limited liability in the UK, is hampering many of the measures aimed at rewarding performance and promoting fairness in relation to executive remuneration. Originality/value – Limited research has been done on executive remuneration. Since executive pay has recently hit the media agenda, this paper purports to tackle a current and ongoing issue. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to investigate changes in the economic importance of performance-related-pay (PRP) in Britain through the 2000s using firm-level data. Design/methodology/approach – The authors utilise nationally representative, monthly data on the total wage bill and employment of around 8,500 firms. Using these data, the authors decompose the share of the total economy-wide wage bill accounted for by bonuses into the shares of employment in the PRP and non-PRP sectors, the ratio of base pay between the two sectors, and the gearing of bonus payments to base pay within the PRP sector. Findings – The growth in the economic importance of bonuses in Britain in the mid-2000s – and subsequent fluctuations since the onset of recession in 2008 – can be almost entirely explained by changes in the gearing of bonus to base pay within the PRP sector. There has been no substantial change in the percentage of employment accounted for by PRP firms; if anything it has fallen over time. Furthermore, movements in the gearing of bonuses to base pay in the economy are heavily influenced by changes in Finance: a sector which accounts for a large proportion of all bonus payments in Britain. Research limitations/implications – The paper demonstrates the importance of understanding further how firms decide the size of bonus payments in a given period. Originality/value – This is the first paper to present monthly firm-level data for Britain on the incidence and size of bonus payments in the 2000s. [ABSTRACT FROM AUTHOR]

Purpose – Turbulent times are here to stay and public leadership needs to become less managerial, more adept at harnessing resources and transforming governance. While the media continues to search for heroic leaders there is a growing awareness that there is more to public leadership than charisma and that compliant leaders do little to nurture innovation. The purpose of this paper is to address the varying concepts of leadership within public services in the UK. Design/methodology/approach – This paper addresses the varying concepts of leadership within public services in the UK and offers a comparative discussion on these choices of types of leadership. Findings – Evidence shows that successful public leaders tend to motivated by social values rather than money and that in the UK, transformative leadership is stronger at the local level than in central government, where although embryonic, political and executive leaders are forging platforms for innovation and new governance systems that central governments could learn from. Originality/value – There are examples of exemplary public leadership in the UK and this paper attempts to unpack where these are, how they challenge existing leadership thinking and why new forms of leadership are critical at this time. [ABSTRACT FROM AUTHOR]

The article presents a detailed investigation of the top management / Chief Executive Officer (CEO) remuneration package and reveals why this is important to the economy. The goal of this paper is to examine the CEO pay (salary + bonus), wealth delta, cumulative value of options held and total compensation throughout Continental Europe and the United Kingdom across a number of various sectors during years 2005 and 2006. Attention is turned to the pre-crisis data analysis which might instigate the argument that CEO compensation was one of the main reasons which lead management to the excess risk taking and reckless decision making. Therefore, it might be concluded that the relationship between risk and executive remuneration can be more subtle and complex than it has been thought. The paper applies the multiple regression model supported by research hypothesis postulation tested by the correlation method and T-test approach. [ABSTRACT FROM AUTHOR]

This paper builds on prior research on compensation consultants and executive pay, which finds widespread use of compensation consultants and higher levels of pay and proportions of equity based-pay in firms that employ consultants. Using a sample of FTSE 350 firms from 2002-2008, we provide new evidence that chief executive officers (CEOs) and executives of firms that switch their main consultant receive higher salary increments in the year of the switch (both absolute and adjusted for median peer levels) and a less risky compensation package, through a higher proportion of bonus and a lower proportion of equity pay. We do not find that executives of firms that increase their number of consultants have higher increases in compensation than nonincreasing firms. Our results provide some evidence that companies successfully engage in opinion-shopping between consultants for more favorable compensation packages for CEOs and executives. [ABSTRACT FROM AUTHOR]

This paper examines the pay-performance relationship between executive cash compensation (including bonuses) and company performance for a sample of large UK companies, focusing particularly on the financial services industry, since incentive misalignment has been blamed as one of the factors causing the global financial crisis of 2007-2008. Although we find that pay in the financial services sector is high, the cash-plus-bonus pay-performance sensitivity of financial firms is not significantly higher than in other sectors. Consequently, we conclude that it unlikely that incentive structures could be held responsible for inducing bank executives to focus on short-term results. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of M&As on bidder (CEO and other) executive compensation employing a unique sample of 100 completed bids in the UK over the 1998–2001 period. Our findings indicate that less independent and larger boards award CEOs significantly higher bonuses and salary following M&A completion both for the full sample and for the UK and US sub-samples. UK CEOs and executives are rewarded more for the effort exerted in accomplishing intra -industry or large mergers than for diversifying or small mergers and their cash pay is unaffected by other measures of their managerial skill or performance. US bidders are rewarded at higher levels than their UK counterparts and their remuneration is related only to measures of CEO dominance over the board of directors. Overall our findings offer support for the managerial power rather than the agency theory perspective on managerial compensation. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to develop, within a decentralized planning framework, a system of incentive payments to firms as a means of correcting labor misallocation in an economy of labor-managed or cooperative firms. This scheme, we believe, may offer certain advantages over existing proposals.
This paper has been mostly concerned with presenting an incentive scheme to remove the inefficiency owing to labor market imperfections in the cooperative economy which has long been recognized in the literature. The significance of the incentive scheme can be seen in two ways. First, it can be considered as a decentralized planning analog to the other proposed solutions to the problem, and thus as a contribution to the theoretical analysis of the inefficiency question. Second, it can be viewed as a policy prescription. However, if this latter viewpoint is taken a number of qualifications have to be made owing to the implicit and explicit assumptions of the model we have been using. [ABSTRACT FROM AUTHOR]

Drawing on the literature on social comparison and equity theories, this paper analyses the determinants of, and the relationships between, the cash pay awards of CEOs and other board members for a sample of large UK companies over the period 1992-95. Our results suggest that external labour market and internal (i.e., within board) pay comparisons are important in explaining both CEO and other directors' pay awards. In the case of CEOs, however, there is evidence of an asymmetric adjustment to prior period pay anomalies, whereby the pay of the relatively underpaid executives displays significantly greater sensitivity to external market comparison pay levels. This asymmetric adjustment process results in a 'bidding-up' of average CEO pay relative to other board members over the four year period investigated. [ABSTRACT FROM AUTHOR]

By comparing the development of competence payment systems in Volvo's Commercial Vehicle plants in Sweden, Belgium, and the UK, the paper seeks to explain some of the reasons why the UK is lagging behind in the development of innovative pay systems. In the Commercial Vehicle sector the reticence of UK-based assemblers such as Volvo and Leyland Trucks to introduce new forms of payment systems can be only partially explained with reference to societal factors. One has to look further, to the historical development of the UK automotive sector and the perception of management that the introduction of a payment system based upon individual effort would lead back to the restrictive practices and demarcation disputes which exemplified the employment relationship in the 1960s and 1970s. [ABSTRACT FROM AUTHOR]

This paper examines the attitudes of the top managers within one large financial services organization in the UK to fixed and variable components of their compensation package. The rationale for performance-related pay for senior managers is to align their interests with those of the shareholders, but little is known about the views of top managers on the effectiveness of such incentives. The results suggest that the design of effective bonus systems is not just a technical issue: perceptions of market fairness with respect to the compensation package and the clear communication of goals are important in getting senior managers to focus on shareholder interests. [ABSTRACT FROM AUTHOR]

The article discusses governmental incentives for researchers to publish their findings in international journals, arguing that the lack of increase in the number of articles published by U.S. scientists is attributable to international competition created by changes in incentives. The authors of the study looked at the number of papers submitted to the journal "Science" by scientists in the U.S. as well as in countries such as Great Britain, New Zealand, and China which reward publications with cash bonuses, funding, and career-based incentives. They conclude that such incentives are positively correlated with the number of both submissions and publications.

In the first British study, we show that the ethnic earnings gap amongst performance pay jobs is smaller than that amongst time rate jobs. This partially reflects sorting but persists with diminished magnitude in fixed effect estimates. Although varying somewhat with specification, quantile decompositions show that the smaller ethnic earnings gap is driven by bonus payments in the upper middle portion of the earnings distribution. These findings differ dramatically from those for the USA in which performance pay has been associated with larger negative racial differentials especially at the top of the earnings distribution. [ABSTRACT FROM PUBLISHER]

We analyse the role of financial sector workers in the huge rise of the share of earnings going to those at the very top of the pay distribution in the UK. Rising bankers' bonuses accounted for two-thirds of the increase in the share of the top 1% after 1999. Surprisingly, bankers' share of earnings showed no decline between the peak of the financial boom in 2007 and 2011, three years after the global crisis began. Nor did bankers' relative employment position deteriorate over this period. We discuss proposed policy responses such as transparency, bonus 'clawbacks', numerical bonus targets and tax. [ABSTRACT FROM AUTHOR]

Analysis of UK financial sector bonus schemes in the years immediately prior to the financial crisis of 2008/09 reveals significant changes in their structure and complexity. In terms of the determinants of levels of bonus award, leverage as a measure of risk exposure is not significant, whilst scheme complexity and return on assets are. The results challenge the supposed link between risk exposure and bonus practice. In this context, we seek to shed light on the UK government's contemporary rhetoric in relation to the regulation of bonuses and its subsequent inaction in terms of sustainable control measures. [ABSTRACT FROM AUTHOR]

We study the drivers of executive compensation in the listed UK property sector. The UK provides an excellent opportunity to analyze executive compensation due to high transparency in the different components of executive compensation . We show that company size is the most important variable in explaining the level of executive compensation. We find that absolute and relative share performance significantly explains long-term compensation, that management style has a distinct influence on the level of executive compensation, and that using alternative monitoring mechanisms (institutional shareholders, debtholders, and outside directors) leads to higher levels of long-term incentives. We find only weak evidence of pay-performance sensitivity for both cash and long-term compensation. Executive shareholdings provide a much stronger link between pay and performance than does executive compensation. [ABSTRACT FROM AUTHOR]

High levels of executive pay in the USA and the UK have attracted journalistic and academic criticism to the effect that they constitute rent extraction by self-interested executives rather than rewards for raising shareholder returns. The focus of most criticism has been on salary, severance payments and various long-term incentives (particularly share options). However, executive bonuses have attracted little attention and have been only lightly regulated. This raises important questions. Has lighter regulation been associated with significant levels of rent extraction through bonuses, that is, a weak relation between bonus pay and shareholder returns? Have more transparent performance conditions attached to bonuses strengthened the relation, making rent extraction more difficult, or have they acted as camouflage for rent extraction, associated with higher bonus pay but lower pay-performance responsiveness? Are measures of CEO power associated with larger bonuses? This empirical note provides the first, preliminary answers to these questions. [ABSTRACT FROM AUTHOR]

The study aims to investigate the determinants of subjective bonus payouts in the UK financial industry. Bonuses are increasingly linked to wider business goals, such as quality and customer service, firm reputation and employee hiring and retention policies, thus replacing the traditional focus on output or profit measures. A new conceptual work on subjectivity is used to evaluate these bonus practices. Results indicate that a variety of contextual factors have influenced the firms to make greater use of subjectivity in bonus payouts. Of these, organizational interdependency appeared to be the most forceful factor, followed by management’s strategic focus, long-term investment in intangibles, economic constraints, performance target difficulty, and competition. The analysis suggests that subjectivity acts as a mechanism that aligns the interests of individual employees with the firm’s performance goals. The study also draws attention to the costs of subjectivity in performance evaluation. [ABSTRACT FROM AUTHOR]

Virtually all prior research on small and medium sized enterprise (SME) management has focused on owner managers. This article, however, empirically examines the determinants of managerial remuneration for a sample of 97 UK SME non-owning managerial employees. The empirical analysis, based upon data obtained from interviews with middle (i.e. non-director level) managers and the published financial records of their employing firms lodged at Companies House, first examines the influence of firm size and performance and then augments the empirical model to include pay composition, industrial sector, external labour market and human capital variables. The empirical results indicate that the average profitability of the employing firms is not a significant determinant of managerial remuneration. However, composition of pay appears to have a significant effect upon total remuneration since, even after controlling for other influences, managers in receipt of annual bonuses and/or profit-sharing bonuses are estimated to earn an additional £6,600. The managers' age and qualifications, and the asset size, industry and location of their employing firms are also significant factors and collectively are able to explain a large proportion of the cross-sectional variance in remuneration. Though there is a lack of previous empirical research on SME managerial pay, these results are broadly consistent with the expectations derived from the extant theoretical and empirical literatures on managerial remuneration. [ABSTRACT FROM AUTHOR]

The interrelations between the search for greater flexibility and the decentralization of industrial relations have received comparatively little attention. The developments within British Steel over the past decade indicate how these two developments can interact. Against a background of a stagnant market for steel, overcapacity, changing state attitudes towards the nationalized sector and a national steel strike, management at British Steel have used local agreements as a key vehicle for introducing widespread restructuring and changes in work organization. In particular, the tying of local bonus payments to achieved performance and to changes in work organization has enabled management to introduce fundamental changes to traditional work arrangements with little worker or union resistance. [ABSTRACT FROM AUTHOR]

The article looks at the systematic evaluation of wage payment methods. Controversies aroused by the use of financial incentive schemes are discussed. While a number of major companies in the U.S. and Great Britain have found wage payment methods unfavorable, many others have expressed satisfaction with output-based financial incentives. A survey conducted by the Institution of Works Managers is examined in which five-sixths of the 229 firms that returned questionnaires claimed to operate incentive schemes. 61 per cent of these firms stated that they were satisfied.

The article looks at the profit-sharing schemes in Great Britain. The aims of the proponents of profit-sharing schemes have changed little since its introduction in the 1840s. Profit-sharing is defined as instances in which an employer agrees with his employees that they are to receive a fixed share in the profits realized by the undertaking of the related profit-sharing scheme. Profits are given to employees in exchange for their labor, although they also receive wages. The International Congress on Profit-sharing was held in Paris in 1889, where they agreed upon the definition of profit-sharing that is generally used today. The plain fact is that each scheme has to be tailor-made to fit the circumstances of the particular firm which has to operate it.