Policy Note: Can Say-on-Pay Curb Executive Compensation?

By Susan R. Holmberg |


Of the few provisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act that address governance of excessive executive compensation, the Say-on-Pay provision is the only one that the U.S. has actually implemented. Critics argue that Say-on-Pay has been a colossal failure in the three years that it has been in effect, and that very few shareholders feel strongly enough about CEO pay to vote against CEO pay packages.

In a new policy note, Susan Holmberg, Director of Research at the Roosevelt Institute, presents the key economic research on the measurable impacts of Say-on-Pay in both the U.S. and the U.K., the latter of which has had a version of Say-on-Pay in force for much longer. Drawing on this evidence, this paper argues that while Say-on-Pay alone will not slow the rise of CEO pay, the policy does have some measurable effect on CEO pay practices. Further, Say-on-Pay can enhance corporate governance practices by improving lines of communication between companies and their shareholders. Along with Say-on-Pay, it is critical that we pursue a range of policies that address the problems of executive compensation.

Susan R. Holmberg is a political economist and a Fellow at the Roosevelt Institute, where she researches and writes on inequality, corporate governance, and climate change issues. Holmberg is the author and co-author of numerous books, reports, and articles including, The Hidden Rules of Race, Rewriting the Rules (with Roosevelt Chief Economist Joseph Stiglitz), Boiling Points, and The Atlantic essay, "Can CEO Pay Ever Be Reeled In?