International Executive Pay: Current Practices and Future Trends
Randall S. Thomas
Vanderbilt University - Law School; European Corporate Governance Institute (ECGI)
September 8, 2008
Randall S. Thomas, INTERNATIONAL EXECUTIVE PAY: CURRENT PRACTICES AND FUTURE TRENDS, Elgar Publishing, 2009
Vanderbilt Law and Economics Research Paper No. 08-26
This article compares executive pay practices in the U.S. with those employed elsewhere in the world. After providing an overview of current practices, it goes on to analyze whether there is likely to be a convergence of these practices. It first examines the influence of market based factors, such as evolving share ownership patterns, cross-border hiring, transnational mergers and acquisitions, and the growth of multinational enterprises, on the likelihood of convergence occurring. It concludes that these factors point in the direction of increasing convergence in executive pay. Next, the paper discusses the influence of legal regulations, including corporate law, judicial interpretations of fiduciary principles, shareholder voting requirements, restrictions on stock option plans and disclosure rules on comparative executive pay practices. Other legal regimes, such as, tax law, labor law, and "soft" law that might also influence executive compensation are also scrutinized to see how they will affect pay convergence. In its final section, the article considers the effects of culture in several countries and how it impacts compensation levels and practices.
Number of Pages in PDF File: 87
Keywords: shareholders, executive compensation, CEO pay, benefits, cross border hiring, transnational mergers and acquisitions, judicial interpretations of fiduciary principles
JEL Classification: G3, G30, K2, K22, J33
Date posted: September 9, 2008
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