Should Shareholders Have a Greater Say Over Executive Pay?: Learning from the Us Experience

Cambridge University Corporate Law, Vol. 1, p. 277, 2001

Vanderbilt Law and Economics Research Paper No. 01-6

Posted: 23 Jan 2002

See all articles by Brian R. Cheffins

Brian R. Cheffins

University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI)

Randall S. Thomas

Vanderbilt University - Law School; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 2 versions of this paper

Abstract

Executive pay arrangements in Britain's publicly quoted companies have been subjected to much criticism in recent years. Proposals that shareholders should have a greater direct say over managerial remuneration have been a by-product of the concerns expressed. Debate on this point, however, has been largely speculative. This is because there is little evidence available in the United Kingdom indicating how shareholders would exercise any new powers they might be given. This paper addresses the evidentiary gap by drawing upon the experience in the United States, where empirical work indicates that shareholder voting only operates as a potential check when pay arrangements deviate far from the norm. In a British context, these findings imply that implementing the shareholder-oriented reforms that have been canvassed recently would fail to address fully the concerns raised by critics of executive pay.

JEL Classification: G30, J33, J38, K22

Suggested Citation

Cheffins, Brian R. and Thomas, Randall S., Should Shareholders Have a Greater Say Over Executive Pay?: Learning from the Us Experience. Cambridge University Corporate Law, Vol. 1, p. 277, 2001; Vanderbilt Law and Economics Research Paper No. 01-6. Available at SSRN: https://ssrn.com/abstract=294621

Brian R. Cheffins (Contact Author)

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom
+44 1223 330084 (Phone)
+44 1223 330055 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Randall S. Thomas

Vanderbilt University - Law School ( email )

131 21st Avenue South
Nashville, TN 37203-1181
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

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