Dodd Honest Essay

1 . As you know, one of many responsibilities of the Board of Directors should be to hire, fireplace, and compensate the CEO. Does " Say about Pay” weaken or enhance the tasks of the Plank of Company directors? " Declare on Pay" compliments the duties from the Board of Directors because it strengthens the partnership between the Board and the shareholders, a staple component to using a strong corporate and business governance. While the " state on pay" votes are nonbinding, they provide shareholders a way to voice their opinion concerning executive reimbursement. This can effectively eliminate agency problems and ensure that Table members accomplish their fiduciary duty to shield the best fascination of the firm. 2 . Exactly what are the advantages and drawbacks of " Say in Pay”? Can be " Claim on Pay” useful? Can it matter because the votes are nonbinding? The advantages of " say upon pay" happen to be as follows:

•Promotes greater responsibility to investors

•Increased interaction between the Plank and shareholders •Allows investors to interact with compensation decision and impact the board's perspective The disadvantages of " say on pay" are the following:

•Shareholders will likely not be informed concerning all facets of the business that influence compensation such as the business business strategy and competitive position, the necessity to focus management's attention to particular aspects of short- and long-term performance, retention issues, etc . •Companies with complex procedures will likely possess very complex compensation decisions which may be tough for investors to comprehend •Compensation programs are not only based upon the present year's performance, but likewise on preceding years' I really believe that " Say upon Pay" pays to in aligning the Board's decision with that of the shareholders, however there are several obvious flaws (see above). If there have been a means to better inform investors of all reasons why a payment plan was prepared, this program would likely show more successful....

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