“ Companies with a strong ethical corporate and leadership culture, often reflected in their stakeholder engagement, tend to have more progressive compensation practices.”
REMCO REPORTS: ANALYSIS OF COMPANY PRACTICE Perkins and Shortland’s (2025) research analysed ethical practices in a sample of Financial Times Stock Exchange-100 (FTSE-100) Remco reports. Most of the firms analysed demonstrated moderate to strong alignment with ethical principles, but with room for improvement. The authors identified a
number of factors that influenced companies’ approaches to ethical compensation
governance.
These included: the comparative regulatory environment; company size and global presence; corporate culture and leadership; and investor pressure. With respect to the regulatory environment, financial services
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face stricter regulations and so these firms tend towards more conservative
compensation
practices. More globally diverse, large companies face greater challenges in ensuring pay equity across different markets. Companies with a strong ethical corporate and leadership culture, often reflected in their stakeholder engagement,
tend to have
more progressive compensation practices. Increasing activism from institutional investors tends to drive forward a greater focus on ESG metrics and long-term value creation in compensation packages. Key themes as identified in
Remco reports included: a strong focus on stakeholder engagement and value creation; a growing trend towards incorporating ESG metrics into executive compensation packages; efforts to address the issue of pay equity, both internally and in relation to broader societal concerns; and a trend towards greater transparency in compensation decision-making processes. However, there is still room for improvement in these and particularly in the integration of virtue ethics into compensation practice. This suggests an opportunity for companies to link executive compensation more explicitly to ethical leadership and corporate culture.
REMCO DECISION- MAKERS: ANALYSIS OF VIEWPOINTS The second strand to the research study analysed Remco decision- makers views’ on ethical issues in executive compensation determination and the complex interplay between the need for effective governance and the practical challenges involved in its implementation. These individuals were elite and hard-to-reach senior personnel, including non- executive directors acting as Remco members/chairs,
institutional
investors, and external specialist executive compensation advisers. Their comments suggested
that current governance structures may prioritise conformity over tailored,
company-specific
solutions, potentially undermining the alignment of management and shareholder interests. There was also a growing scepticism of the ‘talent war’ narrative often used to justify high executive compensation, suggesting attempts among decision-makers to balance fairness with the need to attract and retain top talent. The interviewees expressed potential
concern about the for
executive rewards to undermine public trust, revealing keen awareness of the social contract between business and society. Interviewees
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