Executive Remuneration: Governance, Strategies, and Regulations

This essay delves into the intricate relationship between executive remuneration and corporate governance, emphasizing the importance of aligning executive pay with shareholder returns and executive motivation. It highlights the need for a robust corporate governance foundation in designing, implementing, and administering compensation programs, particularly in the context of the 'say on pay' environment. The essay outlines several key strategies for determining executive compensation, including establishing a proper governance team, ensuring appropriate discussion processes, gathering relevant data, considering diverse perspectives, and making informed pay decisions. Furthermore, it addresses the regulatory landscape, referencing Securities and Exchange Commission (SEC) legislations such as Clawbacks, Alternative Pay Disclosures, and Pay Ratio disclosures, which aim to promote transparency and accountability in executive compensation practices. The essay concludes that effective governance, based on thoughtful consideration and adherence to regulations, is crucial for fostering stakeholder and shareholder confidence in executive compensation decisions.

Running head: CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Name of the Student
Name of the University
Author Note

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Table of Contents
Answer to Question 4......................................................................................................................2
References........................................................................................................................................4

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Answer to Question 4
Executive remuneration can be broadly defined as the pay system which is used in order
to pay the different executives operating in the organization. Very often these executive
remuneration which is given out is considered to be a point of discussion with respect to the
amount to be paid and whether they should be paid such high figures or not (Bivens and Mishel
2013).
In the twenty first century, there exists a say on pay environment where it is very
important for the compensation committees to decide upon a corporate governance foundation
which is used to determine the designing, implementation and the administration of their
compensation programs. However, the strategies assigned for the development of the
compensation program is strongly based on the outcomes of the different programs it is based on
(Schultz, Tian and Twite 2013). There needs to exists a sense of alignment between the total
realizable executive pay and the shareholders return. It is also dependent on the motivation and
the retention of the executive team as well.
As each company`s circumstances are relevant, the governance process may vary from
one company to another. However, the focus must always be on an outcome based analysis. All
the decisions which are taken by the company must be revealed to the public with respect to
findings and other avenues. There are various strategies for deciding the compensation of the
executives and its governance. They are as follows:
1. Ensuring that the fundamental compensations governance is at the right place. This
means that a proper governance team needs to be formed, a philosophy needs to be
followed and the business strategy needs to be identified.

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2. The second step and strategy involves ensuring that the discussion process for the
discussions and decision making are appropriate. This means that the discussions need to
be led by an active chairman, holistic sessions need to be held and lastly, the reference
materials need to be distributed effectively.
3. The analysis and facts need to be gathered. These information need to comprise of
potential pay and performance outcome, relevant internal data and relative comparisons.
4. All relevant perspectives need to be discussed upon to ensure market range, shareholder
perception and other aspects (Tricker and Tricker 2015). They also include talent data,
executive turnover and other aspects.
5. Lastly after all the decisions have been made appropriately then the pay decision needs to
be taken like the actual incentives, salary details and others.
6. All details need to be disclosed to the shareholder (Cheffins 2013).
With respect to the regulations, the Securities and Exchange Commission has stated
down various legislations which demands the company to ask for the detailed information about
the executive compensation practices. The various regulations which exist are the Clawbacks,
Alternative Pay Disclosures, Pay for Performance Pay Ratio. The State pay disclosure regime
and Say on Pay
Therefore, the given stated governance strategies and the regulations are well processed
systems and procedures undertaken in order to ensure that the pay is decided upon correctly. The
governance is based on thoughtful consideration and this is done to help the stakeholders and
shareholders in realizing that their consideration has been considered as well.

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References
Bivens, J. and Mishel, L., 2013. The pay of corporate executives and financial professionals as
evidence of rents in top 1 percent incomes. Journal of Economic Perspectives, 27(3), pp.57-78.
Cheffins, B.R., 2013. The history of corporate governance (p. 47). Oxford: Oxford University
Press.
Schultz, E., Tian, G.Y. and Twite, G., 2013. Corporate governance and the CEO pay–
performance link: Australian evidence. International Review of Finance, 13(4), pp.447-472.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices.
Oxford University Press, USA.