Corporate Governance : A Framework Of Processes And Practices

Better Essays
Corporate governance refers to a framework of processes and practices which businesses follow as a guideline, this includes the way they conduct decisions for corporate affairs and the way which they pursue business objectives. This structure is applied by a board of directors to ultimately ensure that the company’s relationship with stakeholders is transparent and fair, which puts the interests of the company in line with their stakeholders thus ensuring accountability. A part of the corporate governance structure is that of executive compensation; this is a key aspect as compensation policies and practices are vital for the long-term sustainable performance of a company, which can impact shareholders and other stakeholders alike. Executive compensation consists of monetary and non-monetary benefits given to executives within organizations; benefits include salary, bonuses and stock options. The idea of executive compensation is to help attract the right person with qualities needed for that job whilst rewarding and incentivizing them to perform better for the company, enforcing the idea of performance related pay. In October 2013 the ‘Enterprise and Regulatory Reform Bill’ was amended by parliament, the new powers gave shareholders a binding vote on executive compensation, this meant any changes in executive pay required 50% of shareholders’ approval. Before this, shareholders votes were only advisory and so even if there was a vote against executive pay they could be
Get Access