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Article: Say-On-Pay

A recent article, published in the Harvard Law School Forum on Corporate Governance and Financial Regulation, expresses concerns regarding say-on-pay votes under Dodd-Frank.  The article asserts that say-on-pay can cause significant problems, including interfering with a corporation's management of executive pay and the oversight of that management by directors at public corporations.  The author states that this is partly because institutional shareholders (including mutual funds) vote the majority of say-on-pay votes and their agenda may "not coincide with the best design and implementation of executive pay."  He argues that because institutional shareholders buy, hold and sell corporation shares based on portfolio strategies and stock market results, they may not have an interest in the fundamental long-term soundness of executive pay design of the companies they hold.