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Should Shareholders have a Vote on Executive Compensation?

A while back I gave a speech entitled Remarks on Say on Pay: An Unjustified Incursion on Director Authority. As the abstract to the revised and extended written text explains:

These remarks were presented to the Penn Law and Economic Institute’s Chancery Court Program on Say on Pay: A Positive Contribution To Corporate Effectiveness and Accountability Or An Unprincipled and Costly Incursion Into Director Authority?

Proponents of H.R.1257 or similar federal legislation entitling shareholders to vote on executive compensation must carry their burden of proving three distinct claims: First, that there is an executive compensation problem justifying legislative intervention. Second, say on pay is an effective solution to the problem. Third, that any such legislative intervention should be imposed at the federal level.

If any of these claims fail, the case for a federal say on pay law collapses. In these remarks, I hope to demonstrate that none of the three holds up to close examination.

You can download the written text here. The video follows in five parts (divided to satisfy Youtube’s size limits):

Part 1

This Part focuses on the question of whether there is an executive compensation crisis.

Part 2

In this part, I complete the discussion of whether there is an executive compensation crisis and begin discussing whether regulation should be at the state or federal level

Part 3

In this part, I focus mainly on federalism issues.

Part 4

This part opens the discussion of the corporate governance aspects, with a focus on the principle of director primacy.

Part 5

In this part, I finish the discussion of the corporate governance aspects.

Tags:  professor stephen bainbridge say pay shareholder activism corporate governance executive compensation business law