Directors’ pay is a highly complex area with a multitude of rules, regulations and codes of practice; and that is only in the UK.  “Directors’ Remuneration Handbook” is an outstanding reference book and guide to this area.  It deals in concise terms with issues such as reward theory and practice, strategy, design and the host of issues including stakeholders,  pay paradoxes, topical discussions, relevant codes and statutory regulations around the subject.

It is a weighty book with 52 chapters and the same number of tables. The book index runs to nearly thirty pages.  While it is aimed very much at the UK market it has some very useful commentary on US and other jurisdiction’s’ practice.  Cliff Weight is very aware of his target audience of reward specialists, Non-Executive directors, company secretaries, academics and those with a detailed interest in this topical subject.  He moves from the general to detailed technical discussion, such as issues around using Monte Carlo simulations for share option pricing, in an easy to follow way, without being dry and dusty.

The chapter layout is clear and logical allowing readers to dip in and out of the topics that are of interest.  The executive summary at the beginning of the book is, in my view, a “must read” for anyone who wants to get an understanding of the paradoxes and issues within the world of executive pay.  It discusses, among other things, the Principal Agent problem in a very clear way, the issues caused by the differences in time horizons between CEO’s who have a median service of four years; and the vastly different perspectives of long-term shareholders and other key considerations.  The summary also includes seven suggested remuneration strategies depending on where the company is in its lifecycle.

There is a fascinating discussion on the difficulty of measuring short term company performance for executives – particularly when looking at share price movement.  Weight points out the difficulty of using TSR as a pay performance measure over the short-term.  He also touches on tax issues; an important consideration given all the tinkering with the tax system we have seen over the last few years.  He wisely points out that we should not allow director’s pay strategy to be driven by tax considerations.

The bulk of the book focuses on all the issues that impact Director’s remuneration including some useful checklists.  He also discusses in detail the different shareholder approaches to pay and my own personal area of concern, the influence of shareholder advocacy groups.  One of the strong themes in the book is the importance of good communication with and between stakeholders, including management, REMCO, advisors, shareholder advocates, regulators and so on.

The book also contains a wealth of data on the UK directors’ remuneration landscape.  There are many helpful tables in the book; although some are a little unclear – at least without a magnifying glass – but this should not detract from this book being a key reference work and probably the definitive volume on the subject.

This is not a cheap book retailing at over seventy pounds.  However, as a private buyer and compensation and benefits specialist I thought it was worth every penny, my copy is already well-thumbed and notated.

I would highly recommend this book to anyone who has a professional or serious interest in the subject of Directors’ remuneration.

The book is published by Bloomsbury Professional and is available from Amazon (for example) at £70.74.  ISBN 978-1-84766-888-2.