Affecting Executive Remuneration Factor †MyAssignmenthelp.com

Question: What Affects Executive Remuneration. Answer: One factor affecting executive remuneration is a change in company strategy and culture. There are two theoretical lenses through which to examine why companies make changes to remuneration schemes, agency, and expectancy theory. If a company chooses to pay bonuses, this could change pay packages(Bender, 2007). This move will lead to an increase in basic salaries because to reach their goals, they have to take a greater pay-risk for which they will want to be compensated (Remuneration, 2012) General salaries being paid by the market affect executive remuneration. Other factors such as shareholding requirement for executives have no guarantee for a pay increase. Shareholders, when given a say in regulation of executive compensation as they were in the US by the Dodd-Frank Wall Street Reform and the Consumer Protection Act, greatly regulate amounts(Carpenter Yermack, 2013). This is because overpayment is a waste of shareholder resources and generally corrosive to the social fabric and culture. References Bender, R., 2007. Onwards and upwards: Why companies change their executive remuneration schemes, and why this leads to increases in pay. Corporate Governance: An International Review, 15(5), pp.709-723. 'Renumeration: Out of touch with reality' 2012, Euromoney, 42, 513, p. 73, Biography Reference Bank (H.W. Wilson), EBSCOhost, viewed 16 March 2018. Carpenter, J. Yermack, D., 2013. Executive Compensation and Shareholder Value: Theory and Evidence. illustrated ed. Berlin: Springer Science Business Media.