Company law has failed to provide a solution to excess pay Essay

Company law has failed to provide a solution to profusion pay - Essay ExampleIt can be seen that the wage deputation has a great authority to play in as far as maintenance of the appropriate level of the directors salary is concerned. The directors remuneration is mainly comprised of the following salary, bonus, stock options, restricted share plans, pension among other benefits. There is a death link between agency problems that shareholders have in managing the directors.Berle and Means in case of the The Modern wad and Private Property (1932) have identified some problems that are caused by separation of self-will as well as control in US companies around the 1930s. They realised that big companies had share ownership that is dispersed which entitled the board of directors to exert control over the union instead of the actual shareholders. If the directors cultivate the company for their own benefit, this can cause significant problems since they may end up awarding them selves sizable pay packages as well as benefits. Thus, in order to resolve this crisis, the role of the remuneration committee has been put under spotlight by the Greenbury Report and The Code.The Greenbury Committee was established after widespread domain concerns were raised over the excessive amount of money paid to directors of both quoted newly privatized companies. When this code was print in 1995, it specifically dealt with the question of directors pay and the bulk of its recommendations were made from the earlier Cadbury Report. The Greenbury Report has recommended that directors pay should be linked to the companys performance. It also tries to address the problem of rewarding directors who have failed to run the company but at the end of the day get away with handsome benefits. The main aim of the remuneration committee is to prevent the directors from deciding their own levels of remuneration.The Greenbury Report has recommended that the