According to the United States Securities and Exchange Commission states that say on pay requires “public companies subject to the federal proxy rules” to: …show more content…
There are those due to just their size though they have CEO’s who are performing well and are actually not being overpaid. It is cases such as these that have people opposing the say on pay initiative. Witihin the research of Jeffrey N. Gordon in “’Say on Pay’: Cautionary Notes on the UK Experience and the Case for Shareholder Opt-In” he states that say on pay was not very effective within the U.K. so much so that Gordon found it necessary to forewarn the United States. Gordon says: “The efficiency effects of the U.K. system are potentially a matter of concern. As noted above, the only available empirical evidence shows pay-performance responsiveness tied to a current earnings measure, not a stock-based measure” (Gordon 347). Without there being a stock-based measure say on pay does not seem to be as appealing to some people as it does to the others. Especially when the impact on executive pay is almost obsolete generally …show more content…
I believe that it is great for those firms who are dealing with ineffective CEO’s who are being overpaid and underperforming. In cases such as this I believe the say on pay bill is beneficial to the company to cut the CEO’s compensation as well as adding value to the value of the firm. However, when looking at the companies that are being targeted with say on pay with no other justification except for the revenue that the company and CEO are generating seems to be people just “witch hunting”. There are CEO’s who have high salaries though are meeting or exceeding the expectations the shareholders are demanding. It is with cases such as these that I see no need for say on pay to be used within the company. Just because someone makes a sizeable amount of money does not mean that it is not well deserved and earned. I also think that firms need to figure out how to make say on pay more effective even though it is through non-binding voting. Due to say on pay’s non-binding nature it is sometimes dismissed because of this. If people are going to dismiss it say on pay can not serve its purpose within the firms. While the intentions are good I believe that in terms of execution things need to be flushed out more. In “Shareholder Activism and CEO Pay” by Yonca Ertimur, Fabrizio Ferri, and Volkan Muslu they