Who Has The Say On Pay?

Recent high-profile corporate insolvencies and bailouts, particularly in the United States, have drawn international attention to the executive compensation practices of publicly traded companies. While shareholder activists have been demanding for several years the right to an advisory shareholder vote, or say on pay, on the executive compensation programs, this movement recently has been successful in achieving binding or non-binding say-on-pay votes for public companies in the United Kingdom, Australia, the Netherlands, Norway, Spain, France and Sweden.

Proponents of say on pay argue that such a mechanism will help curtail compensation practices that reward excessive risk taking and will better align executive and shareholder interests. Detractors question whether shareholders understand all of the facets of executive compensation and maintain that shareholder views will shackle a board's ability to attract and retain top talent. At least for now, say on pay is