Moloney, Niamh --- "The EU and Executive Pay: Managing Harmonization Risks" [2012] ELECD 620; in Thomas, S. Randall; Hill, G. Jennifer (eds), "Research Handbook on Executive Pay" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on Executive Pay

Editor(s): Thomas, S. Randall; Hill, G. Jennifer

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849803960

Section: Chapter 22

Section Title: The EU and Executive Pay: Managing Harmonization Risks

Author(s): Moloney, Niamh

Number of pages: 20

Extract:

22 The EU and executive pay: managing
harmonization risks
Niamh Moloney


1 INTRODUCTION: THE EU CONTEXT

The purpose of this chapter is to place the executive pay debate, and particularly the
debate as to whether legal intervention is warranted, in the context of the European
Union (EU). Why take a regional approach to executive pay? It might be argued that
jurisdictional scope might be better framed in terms of either the domestic or interna-
tional contexts given the strong local path-dependencies which can influence rule design
and the impact of the global competition for executive talent.
Nonetheless, for a number of reasons, the EU's regional experience with executive pay
is useful. Given the corporate ownership rift which runs across the EU, the EU provides
a useful laboratory for examining how executive pay and executive pay regulation
behave in dispersed ownership and in block-holding ownership conditions, and in rela-
tion to different agency problems and different managerial incentives. The EU's experi-
ence with the harmonization of executive pay rules is relevant to the debate on the
dynamics of harmonization and regulatory competition internationally, given current
moves, albeit in the financial stability context, to develop an international approach to
pay in systemically important financial institutions (Financial Stability Board 2009 a and
b and 2010 a and b). The EU's recent reforms to executive pay (European Commission
2009a and 2009b; European Parliament and Council 2010) usefully illustrate the risks
which follow legislative intervention. In particular, they highlight the ...