Performance and Remuneration of Company Directors-Legal approaches in Germany, the EU, and the U.S.

Abstract

Fundamental changes in the global economy have led to pronounced changes in executive remuneration practices worldwide. Remuneration for company directors has increased dramatically and has become a stumbling block. Various legal approaches have been developed to prevent excesses with regard to executive compensation. While in the past a material assessment of what is reasonable in the past a material assessment of what is reasonable compensation was deemed to be viable and appropriate, recent developments – especially high profle law proceedings – hint at the opposite. Thus, the regulatory focus has increasingly shifted to the pay-setting process. Moreover, recent developments in legislation demonstrate the preference of the law-makers for disclosure obligations. While all of these approaches have their advantages and disadvantages, establishing procedural requirements for the pay-setting process procedural requirements for the pay-setting process and introducing sophisticated disclosure rules are the “globalized” answer addressing the pronounced changes in executive remuneration practices.