Abstract | Purpose: The purpose of this viewpoint is to comment on the implications of the Financial Reporting Council’s (FRC) Review and Consultation Documents expected to update regulation governing the determination/reporting of executive remuneration in UK stock market listed companies. Practical points from actors involved in executive remuneration decision-making/reporting are presented, set within the context of neo-institutional theory. Design/methodology/approach: Our qualitative research systematically analyses UK Corporate Governance Codes, the FRC’s recent Review/Consultation, and peer-reviewed published studies of executive pay determination based on in-depth interviews with non-executive directors, institutional investors, executive pay advisers, and Human Resources (HR) professionals. Findings: Further regulation, while providing coercive influence over executive remuneration decision-making, is likely to lead to only limited change in processes and reporting due to benchmarking, the make-up of Remco membership and shareholders’ preferences. Mimetic and normative isomorphic forces work against coercive isomorphism leading to resistance to change as decision-makers strive to safeguard their social status/reputations. Practical implications: Reviewing executive remuneration package components and paying attention to company strategy, sustainability and values in pay determination are welcomed but recognised as difficult to achieve. Drawing upon a wider range of information sources/voices can assist in broadening the discussion. HR professionals can help widen stakeholder input to executive remuneration decision-making. Originality/value: Our viewpoint is grounded in peer-reviewed empirical data that draws directly upon the views/experiences of executive remuneration decision-makers to identify problems in adhering to FRC recommendations for change. We extend the meta-theoretical perspective of neo-institutional theory – specifically institutional isomorphism – as providing explanatory and predictive power to understand executive pay decision-making. |
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