Board Control, Remuneration Committees, and Top Management Compensation

Abstract

Using panel data on large, publicly traded U.K. companies gathered between 1991 and 1994, we examined the role of board control and remuneration committees in determining management compensation. Board monitoring, measured in terms of the proportion of nonexecutive directors on a board and the presence of remuneration committees and CEO duality, had only a limited effect on the level of top management pay. An important conclusion was that top management pay and corporate performance are more aligned in companies with outsider-dominated boards and remuneration committees.