Albert H. Choi is Professor and Albert C. BeVier Research Professor of Law at University of Virginia Law School; Andrew Lund is Professor of Law at Villanova University Charles Widger School of Law; and Robert J. Schonlau is Associate Professor of Finance at Miami University of Ohio Farmer School of Business. This post is based on their recent paper.
Related research from the Program on Corporate Governance includes Golden Parachutes and the Wealth of Shareholders by Lucian Bebchuk, Alma Cohen, and Charles C. Y. Wang (discussed on the Forum here).
Since the 1980s, the federal government has repeatedly attempted to influence pay-setting for top managers at public companies. Most recently, Congress and the SEC have attempted to amplify the voice of public company shareholders on executive compensation by requiring advisory shareholder votes. These two interventions, known as “Say-on-Pay” and “Say-on-Golden-Parachute,” were promulgated under the Dodd-Frank Act and promised to focus and identify shareholder outrage over problematic pay practices. Say-on-Pay (“SOP”) asks shareholders to vote on the previous year’s executive pay practices in their entirety, while Say-on-Golden-Parachute (“SOGP”) asks shareholders to pass on merger-related severance payments that would become payable to executives when the change-in-control takes place.
