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The paper adopts a novel career perspective to examine theories of corporate control
in the context of executive pay. Detailed career histories of boardroom executives
in all FTSE 350 companies between 1996 and 2008 are utilised. The paper
highlights the failure of existing arrangements to adjust pay outcomes where career
performance is poor. The leading theoretical reasons for this disconnect, namely
managerial power and neoinstitutionalism, are not consistent with the data. The
paper identifies a settling-up process at work, whereby pay is adjusted in the light of
both past pay and past performance. From a policy perspective, a case is made for
adopting a cumulative or career-oriented approach to rewarding executive performance
through the use of truly long-term incentives in the form of ‘career shares’.
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