Corporate Governance and Executive Remuneration: Rediscovering Managerial Positional Conflict

Abstract:     
Like the US, Australia has in recent times experienced a number of dramatic corporate collapses, such as HIH and One.Tel, in which executive remuneration appears as an interesting subtext. While there has been a tendency to view executive remuneration as a specialized topic, its connection to these corporate collapses emphasizes the fact that executive remuneration presents general corporate governance problems in a highly concentrated form.
This article, which discusses a number of recent scandals and developments relating to executive remuneration in Australia, argues that segregation of executive remuneration from other areas of corporate law may lead to dangerous tunnel vision. Professor Eisenberg has spoken of management's positional conflict of interest, due to management's broad range of discretions and relative autonomy within the public corporation. The article considers some ways in which management's positional conflict of interest, particularly in the area of disclosure, may interact with (and potentially subvert) the goals of contemporary performance-based pay schemes.

Number of Pages in PDF File: 40

Keywords: Corporate governance, corporate scandals, CEO compensation, executive remuneration, performance-based pay, stock options, managerial positional conflict, disclosure

JEL Classification: G34, G38, J33, K22, K33, M52

working papers series