Is 'Say on Pay' Justified?
6 Pages Posted: 15 Aug 2009 Last revised: 22 Sep 2009
Date Written: 2009
There is growing political support for adopting a 'Say on Pay' requirement for executive compensation - that is, shareholders must sign off on executive compensation. This paper examines three premises fundamental to the 'Say on Pay; movement: that current executive compensation is unjustifiably high, that federal legislation is required to address that high compensation, and that federal legislation would be effective in this aim. The paper finds that all three claims are problematic.
Keywords: federalism, say on pay, h.r. 1257, executive compensation, corporate governance, principal-agent dilemma, director primacy, shareholder activism
JEL Classification: D60, D70, G30, G34, G38, J33, L10, L21, M10
Suggested Citation: Suggested Citation