Book contents
- Frontmatter
- Contents
- Acknowledgments
- Prologue: The Compensation Committee Meets
- Introduction: The Battle over Executive Compensation
- 1 The Myths and Realities of Pay-for-Performance
- 2 Managerial Power
- 3 External Pressures: The New Context for Executive Compensation
- 4 End of an Era: The Decline of the Stock Option
- 5 The Future of Long-Term Incentives
- 6 Executive Stock Ownership: The Solution to the Executive Compensation Crisis
- 7 Director Compensation in the New Environment
- 8 The Compensation Committee: Creating a Balance between Shareholders and Executives
- 9 Aligning All Employee Pay to Improve Corporate Performance
- 10 International Executive Pay Comparisons
- Conclusion: The Future of Executive Compensation
- Epilogue: Back in the Boardroom
- Appendix A Legal and Regulatory Requirements for Executive Compensation Plans
- Appendix B Summary of the Regulatory and Institutional Mandates and Recommendations
- Appendix C Academic Articles on Pay-for-Performance and the Effectiveness of the Executive Labor Market
- Notes
- Index
10 - International Executive Pay Comparisons
Published online by Cambridge University Press: 31 July 2009
- Frontmatter
- Contents
- Acknowledgments
- Prologue: The Compensation Committee Meets
- Introduction: The Battle over Executive Compensation
- 1 The Myths and Realities of Pay-for-Performance
- 2 Managerial Power
- 3 External Pressures: The New Context for Executive Compensation
- 4 End of an Era: The Decline of the Stock Option
- 5 The Future of Long-Term Incentives
- 6 Executive Stock Ownership: The Solution to the Executive Compensation Crisis
- 7 Director Compensation in the New Environment
- 8 The Compensation Committee: Creating a Balance between Shareholders and Executives
- 9 Aligning All Employee Pay to Improve Corporate Performance
- 10 International Executive Pay Comparisons
- Conclusion: The Future of Executive Compensation
- Epilogue: Back in the Boardroom
- Appendix A Legal and Regulatory Requirements for Executive Compensation Plans
- Appendix B Summary of the Regulatory and Institutional Mandates and Recommendations
- Appendix C Academic Articles on Pay-for-Performance and the Effectiveness of the Executive Labor Market
- Notes
- Index
Summary
International convergence to U.S. pay levels would occur if, and only if, the economic value of foreign executives to their firms increased enough to entitle them to receive higher compensation. This type of change would arise only if foreign CEOs' decision-making powers increased, foreign firms grew larger, or foreign firms' growth opportunities expanded.
Randall S. Thomas, John S. Beasley II Professor of Law and Business, Vanderbilt University Law SchoolThroughout the world, U.S. compensation ranks at the top in both pay opportunity and amounts received. But other economically successful countries – including the United Kingdom, France, Canada, and many in the Asia-Pacific region – have different economic and business approaches, including their approach to executive pay. These models fit with the unique culture and corporate governance systems of each country, and all exhibit some pay-for-performance sensitivity.
Many critics of the U.S. executive pay system argue that shareholders would benefit from adopting features from other countries, especially those of the United Kingdom: more performance vesting on stock options and shares; shareholder votes on executive pay; separate chairman and CEO positions; and lower levels of pay opportunity and pay earned.
It makes sense that all economies, and the corporations that constitute a large part of them, should be flexible and adopt successful components from other countries. But just as other countries cannot adopt the U.S. approach in toto, neither can the United States fully adopt other systems. The United States has adopted some of the United Kingdom's practices, primarily performance-based vesting.
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- Myths and Realities of Executive Pay , pp. 180 - 203Publisher: Cambridge University PressPrint publication year: 2007