"Say on Pay": A Wolf in Sheep's Clothing?

Mangen, Claudine; Magnan, Michel
May 2012
Academy of Management Perspectives;May2012, Vol. 26 Issue 2, p86
Academic Journal
This paper debates whether "Say on Pay" can fix executive pay. We argue that Say on Pay benefits executive pay when shareholders' voice offsets CEO power and mitigates directors' information deficiencies. We warn, however, that Say on Pay may raise two novel problems. First, executive pay may harm stakeholders whose interests differ from those of shareholders influential in pay setting. Second, boards may resist shareholders' intervention in pay setting and, as a result, manage compensation disclosures to ensure a passing shareholder vote. Consequently, Say on Pay may not only fail to remedy suboptimal pay but also legitimize it.


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