Shareholders Need a Say on Pay

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Published In Working Knowledge November 2, 2009, by Julia Hanna
With executive compensation soaring to unprecedented levels in recent years, the prickly issue of CEO pay has received increasing media and government attention. Now, with the perfect storm of a failing economy, government bailouts, and high unemployment, the topic has hit white-hot status.
One particular tool put forward in reforms is the idea of “say on pay,” which gives shareholders a non-binding vote on executive compensation and severance packages. The Obama administration has proposed requiring it in all public companies. And just before its August recess, the U.S. House of Representatives passed a bill granting shareholders a non-binding vote on executive compensation and severance packages. It also maintains that compensation committees should be independent of management.

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