Board Control, Remuneration Committees, and Top Management Compensation

Using panel data on large, publicly traded UK companies gathered between 1991 and 1994, a study examines 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.