Is 'Say on Pay' Justified?

Bainbridge, Stephen M.

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Is 'Say on Pay' Justified?

Regulation, Vol. 32, No. 1, pp. 42-47, Spring 2009

UCLA School of Law, Law-Econ Research Paper No. 09-19

6 Pages Posted: 15 Aug 2009 Last revised: 22 Sep 2009

See all articles by Stephen M. Bainbridge

Stephen M. Bainbridge

University of California, Los Angeles (UCLA) - School of Law

Date Written: 2009

Abstract

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

Bainbridge, Stephen Mark, Is 'Say on Pay' Justified? (2009). Regulation, Vol. 32, No. 1, pp. 42-47, Spring 2009 , UCLA School of Law, Law-Econ Research Paper No. 09-19, Available at SSRN: https://ssrn.com/abstract=1452761