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학술저널
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한국경영법률학회 경영법률 경영법률 제20권 제3호
발행연도
2010.1
수록면
131 - 182 (52page)

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The topic of 'Executive Compensation' generates heated discussion in the past decade. Few other issues have generated as much interest in the corporate governance as executive compensation. Major corporate scandals, such as Enron, Worldcom, and Mannesmann, were associated with flawed executive compensation structures and the related generation of perverse management incentives. Shareholder interest in executive compensation has remained acute in recent years. Several legislations and regulations have been enacted in multi-jurisdictions, such as EU, Germany, USA, and Japan. Excessive risk-taking in the financial sector has played an important role in the major financial crisis of 2007-2009. Many people believe that compensation practice at large financial institutions are one factor among that contributed to the financial crisis. The collapse last year of major financial institution run by extraordinarily well-paid executive compensation has brought intense focus to executive compensation. High short-term profits led to generous bonus payment to executives and employees without adequate regard to the longer-term risks they imposes on their firms. These incentives could have encouraged excessive risk-taking. These problem has widely accepted in the aftermath of the financial crisis. These deficiencies call for legislative and official action to ensure that compensation practices in the financial sector are sound. The FSB(Financial Stability Board) Principles for Sound Compensation Practices and Implementation Standards are intended to response to the problem in compensation structure. A promoting legislative approach to reining in executive compensation, such as a mandatory shareholder vote on pay, disclosure on compensation, etc. has been took in multi- jurisdictions. Korean Financial Supervisory Commission(FSC) has also complied the FSB Principles, and korean financial self-regulatory organs have participated in these regulatory responses by making best practice standards on compensation. In contrast, further regulations are still called for in korean executive compensation regime, such as clear and comprehensive disclosure about compensation practices.

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