“Say on Pay”: The Movement to Reform Executive Compensation in the United States and European Union

Pagnattaro, Marisa Anne, Greene, Stephanie | January 1, 2011

In the aftermath of an array of economic failures, there is a growing movement to reform executive compensation. Concerned that executive compensation structures reward inappropriate risk taking and create a short-term perspective, the United States and the European Union are taking steps to reform the ways executives are compensated. Part I analyzes governmental and regulatory action in the United States, including SEC disclosure rules and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Part II details new initiatives in the European Union that recommend changes to remuneration for directors of listed companies and remuneration in the financial services sector, as well as steps taken in EU Member States to implement specific changes. Inasmuch as the reform initiatives in the United States and the European Union create new responsibilities for shareholder participation in compensation, Part III recommends additional tools for shareholders to monitor ?pay for performance.