Directors' Remuneration: A Practical Critique of Corporate Governance Effectiveness

AuthorHarry Milligan
Dundee Student Law Review, Vol. II, No. 4
Directors’ Remuneration: A Practical Critique of
Corporate Governance Effectiveness
Harry Milligan
The attitude of deregulation and shareholder primacy that developed during the
1980s is being challenged by today’s society in light of widening inequality.
Despite directors’ remuneration being predicted as problematic in 1932 by
Berle and Means,1 in the last thirty years top level pay has "sky-rocketed,
contributing to inequality trends not seen since the 18th century. Thomas
Picketty, an eminent French economist specialising in the study of inequality,
has written that the primary reason for the increased income inequality in
recent decades is the rise of the supermanager in both the financial and
nonfinancial sectors.2 Research conducted by the High Pay Centre shows that
although directors were well rewarded in the 1980s, levels were proportionate
to the rest of society. However, Since then some of them have enjoyed an
increase of over 4000% to what are now multi-million pound packages.3 The
High Pay Centre claims that where income inequality persists, social unrest
grows with poorer groups pursuing their economic objectives outside the
mainstream.4 We may confidently assume that if income inequality is to be
addressed, the current regulation of directors’ remuneration will require
reform. To this date, regulation has not been introduced with the specific
purpose of tackling income inequality by controlling top level remuneration.
Current soft law regulations can be found in the UK Corporate Governance
Code (CGC), which is not legally binding. Instead, it operates on a comply or
1 A Berle and G Means, The Modern Corpora tion and Private P roperty (Transaction
Publishers 1932).
2 Thomas Picketty, Capita l in the Twenty-First Century, (The Belknap Press of Harvard
University Press 2014) 315.
3 High Pay Centre, Cheques with Balances: Why Tackling High Pay is in the Natio nal
Interest, <> accessed 1 6 October
4 Ibid.

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