The Compensation of Senior Executives at Listed Companies

In the financial world, concern about executive compensation typically is limited to whether or not rewards directly correspond to results created by management’s decisions or actions. Of equal importance, however, is whether the board of directors or supervisory board of a company has devised a remuneration plan that induces management to act in a manner that is consistent with the interests of shareowners.

For the most part, shareowners and investors have only the regulatory disclosures mandated in their regions to answer these questions. Although these disclosures have improved in recent years, there is still very little guidance available to help investors understand how boards develop and decide on compensation systems for the individuals hired to manage these companies. As a supplement to The Corporate Governance of Listed Companies: A Manual for Investors, this manual builds awareness of how executives are paid and describes the governance structures that help set compensation plans within companies.