Manuscript Type: Empirical
Research Question/Issue: This study questions the adequacy of the agency approach in representing how remuneration committees design executive pay arrangements.
Research Findings/Results: Using evidence collected from interviews conducted in late 2006, with 22 members of various UK remuneration committees, we find that concerns with legitimacy push remuneration committees towards an institutional isomorphism in processes and practice.
Theoretical Implications: Any interpretation through an agency lens of the design of executive remuneration as being a key component in the toolbox of strategic human resource management needs to be qualified by considerations of neo-institutionalism. There is scope for a melding of the two approaches.
Practical Implications: The fulfillment of the expectations placed upon the remuneration committee necessitates an adequate allocation of time and resource plus self-awareness on the part of the committee of the inherent tendency to follow the norms, rules of thumb, and customary practice of others. The remuneration committee chair emerges as a pivotal actor, and this position merits being treated as a weighty and onerous appointment, possibly on a par with that of the chair of the audit committee.
- board processes
- compensation committee
- United Kingdom