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Should Shareholders Be Entitled To A Vote On Executive Compensation? A Critical Survey

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  • Loveira Pazó, Rosa María

Abstract

Corporate scandals within the last two decades have shown that good corporate control systems are not only a moral claim but also an economic need. A mechanism of corporate governance currently in the spotlight is “say-on-pay”, a form of shareholder activism that represents the capacity of shareholders to vote on executive compensation policies. Proponents of implementing “say-on-pay” by law argue that it is the existence of an “executive compensation problem”, jointly with different political and social arguments, what justifies legislative intervention. In this study, we discuss some economic reasons that minimize the appeal to entitle shareholders to a vote on executive compensation.

Suggested Citation

  • Loveira Pazó, Rosa María, 2011. "Should Shareholders Be Entitled To A Vote On Executive Compensation? A Critical Survey," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 20(1).
  • Handle: RePEc:sdo:regaec:v:20:y:2011:i:1_11
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