Sunday, September 14, 2008
International Executive Pay: Current Practices and Future Trends, by Randall S. Thomas, Vanderbilt University - School of Law; Vanderbilt University - Owen Graduate School of Management, was recently posted on SSRN. Here is the abstract:
This article compares executive pay practices in the U.S. with those employed elsewhere in the world. After providing an overview of current practices, it goes on to analyze whether there is likely to be a convergence of these practices. It first examines the influence of market based factors, such as evolving share ownership patterns, cross-border hiring, transnational mergers and acquisitions, and the growth of multinational enterprises, on the likelihood of convergence occurring. It concludes that these factors point in the direction of increasing convergence in executive pay. Next, the paper discusses the influence of legal regulations, including corporate law, judicial interpretations of fiduciary principles, shareholder voting requirements, restrictions on stock option plans and disclosure rules on comparative executive pay practices. Other legal regimes, such as, tax law, labor law, and "soft" law that might also influence executive compensation are also scrutinized to see how they will affect pay convergence. In its final section, the article considers the effects of culture in several countries and how it impacts compensation levels and practices.