Executive Remuneration and Corporate Governance in the EU: Convergence, Divergence, and Reform Perspectives

Posted: 30 Nov 2007

See all articles by Guido Ferrarini

Guido Ferrarini

University of Genoa - Law Department and Centre for Law and Finance; European Corporate Governance Institute (ECGI)

Niamh Moloney

London School of Economics - Law Department; European Corporate Governance Institute (ECGI)

Abstract

This article examines the current controversy as to the effectiveness of executive remuneration as a tool of corporate governance but places the analysis in the particular context of the dispersed ownership/blockholding ownership faultline which runs across European corporate governance. It reveals that there is a close relationship between governance systems and the sophistication and rigour of the regulatory response to executive remuneration. To place the European responses to the executive remuneration question in context, Part I sets out the main theoretical arguments which frame the executive remuneration debate and examines the link between remuneration and corporate governance. Part II examines, in the light of the preceding discussion, the regulatory strategies adopted by EU Member States with regard to executive remuneration and reveals the extent to which their responses track corporate governance systems in terms of sophistication and degree of intervention in remuneration practices, particularly with respect to disclosure. Overall, regulatory strategies focus on company disclosure and corporate governance structures, and are grounded both in public regulation and in corporate governance best practices. Part III discusses reform perspectives with particular reference to the 2002 Winter Report and the 2003 Company Law Action Plan.

Suggested Citation

Ferrarini, Guido and Moloney, Niamh, Executive Remuneration and Corporate Governance in the EU: Convergence, Divergence, and Reform Perspectives. European Company and Financial Law Review, Vol. 1, No. 3, 2004. Available at SSRN: https://ssrn.com/abstract=1036161

Guido Ferrarini (Contact Author)

University of Genoa - Law Department and Centre for Law and Finance ( email )

Via Balbi, 22
16126 Genova, 16100
Italy
+39 010 209 9894 (Phone)
+39 010 209 9890 (Fax)

HOME PAGE: http://www.clfge.org

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Niamh Moloney

London School of Economics - Law Department ( email )

Houghton Street
London WC2A 2AE, WC2A 2AE
United Kingdom

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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