Total board remuneration and company performance

Using a hitherto neglected source of data, this paper combines executive emoluments with executive share options to construct a broader measure of executive pay than has been possible in earlier British studies. The result of including the long-term share option component of pay along with the more commonly utilised short-term component of emoluments is to reveal executive pay as being significantly more sensitive to company performance than has previously been thought to be the case. The paper questions the current policy stance of British institutional investors and of the Greenbury Committee with respect to executive share options.