Is 'Say on Pay' Justified?
Stephen M. Bainbridge
University of California, Los Angeles (UCLA) - School of Law
Regulation, Vol. 32, No. 1, pp. 42-47, Spring 2009
UCLA School of Law, Law-Econ Research Paper No. 09-19
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.
Number of Pages in PDF File: 6
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
Date posted: August 15, 2009 ; Last revised: September 22, 2009