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Executive compensation in the UK

  • Law


Purpose – While executive compensation has attracted quite a lot of media interest in the UK over the past decade, it is worth emphasising that the debate in the UK has had far less “heat” than that in the USA; this seems to be explained by the UK avoiding, for a number of reasons, the excesses of executive compensation seen in the USA and also excessive, high profile corporate failures (e.g. Enron). The purpose of this paper is to provide a review of executive compensation with respect to the UK. Design/methodology/approach – The paper is a general review of the academic and business literatures. Findings – The paper emphasises the need to keep the broader context in mind when reviewing issues of executive compensation, and offers a framework of analysis which is broader than that used in the existing literature. It summarises the stylised facts which have emerged from the extensive academic literature and then offers brief summaries of the recent trends in UK executive compensation and the ABI guidelines issued at the end of 2005, respectively. Originality/value – The paper discusses the challenges facing executive compensation in the UK.

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