Rock Center: Ten Myths of Say on Pay

17 11 2012

This post summarises the findings of an interesting paper called Ten Myths of Say on Pay (Larker et al) published by the Rock Center for Corporate Governance. The executive remuneration debate is hard to balance and at times even harder to conceptualise. Other academics such as Professor Cheffins and Randall Thomas argue that sudden increases in pay can be controlled through say on pay but in the long run executive pay would continue to increase. It seems that there is truth in both approaches and the Rock Centre’s paper is worth reading to get insight on the remuneration debate in a US-UK perspective. In any event, the “ten myths” are:

(1) There is only one approach to say on pay: it is argued that given the views that are out there, no one can agree on how to solve the problems of compensation.

(2) All shareholders want the right to vote on executive compensation: it is said thatPrior to Dodd-Frank, shareholder support for proxy proposals requiring say on pay routinely failed to garner majority support. Among the 38 companies where shareholders were asked to vote whether they wanted the right to vote on executive compensation in 2007, only two received majority approval. Read the rest of this entry »