Executive Remuneration Essay Example | Topics and Well Written Essays - 2000 words

Executive Remuneration - Essay Example These debates on the director’s compensation has been seen in most countries more notably the Royal Bank case involving Stephen Hester and this has led to most companies developing their own measures and procedures to be followed in the remuneration of executives to avoid much pressure from the government and the public interest. The perception that Hester received much remuneration package while the shareholders were rewarded lowly in terms of their performance contribution to the company has raised much debate. According to Lee (2002), the level of executive’s compensation has continued to raise much heat to the public. Therefore the much interest from the public, state regulators, and the media have seen most companies taking more time and paying a lot of attention to investigate, documenting and announcing executive remuneration. In order to cool down the much heated debate, public limited companies should implement the following practices and legal procedures. Coming Up With A Compensation Committee Once a company has a specialized committee that knows her functions is a better way to ensure that the committee has time and devotion to attend matters related to the executive compensation. The compensation committee usually operates within certain regulated legal authority, and resolution that is written by the full board of directors. The legal restrictions are put in place to avoid much conflict between the board and the executive staff over the amount of compensation.