Abstract

We examine how UK listed companies set executive pay, considering the implications of following best practice in corporate governance and how this canconflict with what stakeholders might perceive as good behaviour. We do this by presenting the results of 40 interviews with protagonists in the debate, setting out the dilemmas faced by remuneration-setters, and how the processes they follow can lead to ethical conflicts. Overall, we conclude that although best practice might drive good behaviour, it often does not.