Executive remuneration: the power and dominance of human greed
| Date | 07 October 2019 |
| DOI | https://doi.org/10.1108/JFC-06-2017-0059 |
| Pages | 978-992 |
| Published date | 07 October 2019 |
| Author | Ernestine Gheyoh Ndzi |
Executive remuneration: the
power and dominance of
human greed
Ernestine Gheyoh Ndzi
School of Law, York St John University, York, UK
Abstract
Purpose –The paper aims to examine the role of human greed in the determination of executive
remunerationin the UK.
Design/methodology/approach –The paper reviews the past and existing regulation and corporate
governancerecommendations on executive remuneration.
Findings –The paper demonstrates thatthe failure of regulatory mechanisms to curb excessive executive
remuneration can be justifiedon the grounds of human greed. Greed is facilitated by the potential conflict of
interest that exists as a resultof the executives’position in the company. The position of the law has given
greed the opportunity to manifest, making it quite difficult for executive remuneration to be effectively
regulated.
Originality/value –The paper adds to the existing debate on excessive executive remuneration by
demonstrating thathuman greed is the basis of excessive executive remuneration on which limitedliterature
exists.
Keywords Corporate governance, Executive remuneration, Human greed, Companies Act 2006
Paper type Research paper
Introduction
The constant making and revision of laws and recommendations on executive
remuneration tend to suggest that there is a “bigger”cause to the problem than a simple
luxurious pay package. This “bigger”cause is called human greed. Posner explains
human greed as “man as a result of living in a world of limited resources, is a rational
self-maximiser, i.e. he always aims to maximise his satisfaction and self-interest which
is essentially greed[1].”Greed can be further explained by referring to the Oxford
English Dictionary, which defines it as “the intense and selfish desire for something,
especially wealth, power, or food”. Executives occupy one of the most important
positions in a company because they act on behalf of the company making crucial
decisions on a day-to-day basis. This position of an executive in the company present
potentials for conflict of interest which if not well managed could be a vehicle for greed
to ride on. Executive remuneration is part of the corporation’sculturewherethe
management (board of directors) decide how much to pay the executives in accordance
with the company’s articles of association and policies. This position present the
executives with potential to want to desire/acquire more wealth and power for
themselves than for the company which generally could result from human greed.
Excessive executive’s remuneration has been in the spotlight since the early 1990s
because of its lack of link between executive directors’pay and company performance,
as well as the widening pay gap between the executives and ranked profile employees.
This paper argues that without the presence of human greed executives would make
JFC
26,4
978
Journalof Financial Crime
Vol.26 No. 4, 2019
pp. 978-992
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-06-2017-0059
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm
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