33 Pages Posted: 12 Mar 2011
Date Written: March 10, 2011
Plato describes a world of Ideals, and suggests that our own world contains just shadows of these perfect forms. This paper finds that The Platonic Ideal envisaged in governance regulation is unattainable. Interviews with FTSE 350 remuneration committee members and their advisors show that the rhetorics of governance disclosure imply conformity, but the enacted realities cover a wide range of practices. Some of these comply with the spirit of the governance regulation, but others leave something to be desired. Governance in practice relates to behaviour, not structure, and behaviours vary widely between companies, in ways are not obvious to an external observer. This implies that corporate disclosures present an incomplete picture of practice. Companies are interpreting best practice in different ways with a variety of outcomes.
The study offers insights to companies and regulators. Governance regulation is growing, but process and behaviour are not as easily regulated as are structures. Boards need to be alert to the fact that compliance in itself does not guarantee good governance.
Keywords: remuneration, compensation, regulation, governance, Plato, ideals, power
JEL Classification: G30, G34, M52
Suggested Citation: Suggested Citation