Managerial Remuneration and Agency Problems of Corporate Governance

Abstract

The author discusses the issue of remuneration for the company board members from the point of solving or mitigating the agency problems of corporate governance. Theoretical debates surrounding the eligibility of structures of managerial remuneration in companies have different starting positions. In a broader sense the issue of remuneration is seen as a way of transferring wealth within the company and can be accommodated within the traditional company management legislation. The ownership structure of the company, election of corporate bodies, as well as the delineation of their responsibilities cause agency problems of corporate governance. The model of dispersed ownership deals with the relationship between remuneration and the first agency problem (the relationship between shareholders and management), while theb concentrated ownership model deals with remuneration and the second agency problem (relationship between majority and minority shareholders). This paper deals with the effect of the board structure on remuneration and gives an overall assessment of the link between remuneration and agency problems of corporate governance in Serbia.